U.S. dollar strength again seems to be weighing on commodity markets. Renewed concerns about European Monetary Union and the euro have surged again this week, with both Greece and Italy making headlines in the financial press. The U.S. dollar resumed last week’s late surge in early trading, thereby increasing the implicit cost of U.S. goods to export customers. That fact seemed to drag corn lower to start this week’s trading. July corn futures slipped 0.5 cent to $3.59/bushel Monday night, while December dipped 0.75 to $3.77.
Palm oil seems to be boosting soyoil and beans. It would be easy to assume that the U.S. dollar advance would depress the soy complex along with the grain markets, but that wasn’t particularly the case last night. That is, despite the dollar rise and concurrent crude oil weakness, soybean oil futures rallied strongly to start the week. That almost surely reflected spillover buying from resurgent palm oil prices. Beans seemed to follow along, whereas meal was on the short end of crush spreading. July soybean futures rallied 3.25 cents to $9.275/bushel early Tuesday morning, while July soyoil surged 0.44 cents to 32.08 cents/pound, but July meal skidded $0.3 to $303.9/ton.
The wheat markets are trading mixed. The rainfall continuing to pound the southern and western Plains is very likely damaging winter wheat prospects in that region, whereas grain grown in the eastern Corn Belt hasn’t been swamped. Those developments, along with the U.S. dollar strength would seem to explain the Chicago weakness and strength in the KC and Minneapolis markets. July CBOT wheat futures slid 2.25 cents to $5.13/bushel shortly after sunrise Tuesday, while July KC wheat rose 1.0 cent to $5.4775/bushel, and July MWE wheat gained 1.75 to $5.705.
Cattle futures traded mixed last Friday. Friday’s U.S. dollar surge didn’t seem to greatly affect the cattle market, which probably reflects the reduction in exports over the past few years. Actually, many in the industry were surprised by the noon (EDT) release of the monthly USDA Cattle on Feed report (historically published at 3:00 PM). Low marketings and placements made for a mixed CME reaction, with deferred contracts tending to move upward in response to the latter result. Expectations for weak beef demand this week could bode ill for today’s opening. June live cattle futures ended Friday having slipped 0.25 cents at 152.12 cents/pound, while August cattle stumbled 0.20 lower to 150.70. Meanwhile, August feeder cattle futures jumped 1.27 cents to 219.00 cents/pound, and November feeders vaulted 1.17 to 216.30.
og futures ended last week on a firm note. Friday’s midsession cash and wholesale quotes proved quite weak, while the monthly USDA Cold Storage report indicated huge pork holdings in U.S. freezers. The fact that futures held up surprisingly well despite that news suggests considerable bearishness was already built into the market. The late day firmness was impressive, but losses reflected by the late afternoon reports suggest a weak opening today. June hog futures slipped 0.05 cents to 83.72 cents/pound in late Friday action, while December inched up 0.05 to 70.25.
Cotton futures seemed to post a pragmatically driven bounce. Cotton futures ended last week badly, with nearby futures falling below major technical support. It was easy to assume it would follow through to the downside today, but prices bounced despite the U.S. dollar rally. The fact that speculators had been liquidating long positions and likely did much more of the same before the weekend may have opened the door for an early-week rebound. July cotton climbed 0.29 cents to 63.59 cents/pound in early Tuesday trading, while December futures ran up 0.20 to 64.58.