Worries about global demand seemed to undercut crop markets Monday night. Although equity index futures suggest stock prices will rally today, crude oil future remained under pressure, while the U.S. dollar rose. On top of concerns about global demand strength as energy prices drop, the direct effect on the ethanol and corn markets seemed to take a toll. Fresh U.S. dollar strength may also bode ill for exports. March corn futures sagged 3.5 cents to $3.835/bushel early Tuesday morning, while July lost 3.5 to $3.975.
Weekend news didn’t encourage soybean bulls. After conditions in some of Brazil’s most productive soybean areas had recently turned dry, a big rain event is now expected later this week. That bearish production news was met by talk of growing Chinese economic weakness, especially after last Friday’s Chinese cancellation of a big soybean shipment. Continued dollar strength also raises questions about the export outlook. March soybean futures fell 7.25 cent to $9.845/bushel Monday night, while March soyoil dropped 0.29 to 33.10 cents/pound, and March meal slipped $1.5 to $324.7/ton.
The wheat markets also lost ground. There was little wheat news over the weekend, although a comment from Russia’s Deputy PM saying he saw no need to ban grain exports could hardly be seen as a bullish sign. The relative expense of U.S. wheat, along with the rising value of the dollar, suggest little prospect for resurgent exports in the near future. March CBOT wheat dipped 2.25 cents to $5.305/bushel in early Tuesday trading, while March KC wheat slid 1.75 cents to $5.7252/bushel, and March MWE wheat stalled at $5.845.
Cattle futures stabilized before the long weekend. Last week’s futures-led breakdown in country cattle prices cycled back into the Chicago market Friday morning, with traders seemingly believing they’ll see more of the same this week. CME futures firmed late Friday, possibly on short-covering before the long weekend, but Monday’s wholesale losses suggest renewed weakness today. February live cattle futures rose 0.25 cents to 154.45 cents/pound in late Friday action, while the April contract crept up 0.15 cents to 152.95. January feeder cattle futures plunged 1.55 cents to 214.10, and March feeders slumped 0.75 to 204.85.
CME hogs turned lower once again last Friday. Although spot prices were generally stable Thursday afternoon, CME futures moved substantially lower once again Friday. Industry insiders were apparently hearing more bearish indications, which prompted a fresh round of selling. Monday’s cash losses suggest a weak opening. February hog futures dove 1.12 cents to 74.50 cents/pound at their Friday settlement, while June hogs tumbled 1.27 cents to 86.65.
Cotton futures declined in concert with the other crop markets. Although it would be very easy to assume that Monday night strength in equity index futures would have pulled the cotton market higher, that wasn’t the case. The same concerns about the global economy and concurrent U.S. dollar strength may have worked against bulls. A report that Chinese cotton imports during the 2014/15 are running over 40% behind the year-ago pace may also be undercutting prices. March cotton futures sank 0.07 cents to 59.16 cents/pound shortly after sunrise Tuesday, while the July contract edged 0.08 lower to 60.83.