Financial market action may be depressing the ag markets. News that Argentine farmers are planning a three-day selling strike to protest government policies might easily have been seen as supportive of U.S. grain and soy markets, since that might shift buyer interest back to the U.S. However, the ag markets suffered general overnight losses, which probably reflected another setback in equity index futures and the U.S. dollar index at a fresh 11-year high, both of which are negative for demand. May corn futures edged 0.75 cent lower to $3.9075/bushel Tuesday night, while December lost 1.0 to $4.155.
The soy complex posted across-the-board losses Tuesday night. Although Brazil’s transport problems appear to be easing, news of the planned Argentine farmer strike seemed quite supportive of bean and meal futures. Nevertheless, the soy markets accompanied the grains lower as equity indexes sank and the dollar climbed last night. May soybean futures fell 7.0 cents to $10.0525/bushel early Wednesday morning, while May soyoil slid 0.18 cents to 32.79 cents/pound, and May meal slipped $2.0 to $330.8/ton.
Wheat markets quickly lost Tuesday’s bullish momentum. Farmer selling to meet March 1 bills reportedly played a big role in recent wheat losses, whereas the end of that selling this week apparently tightened country supplies very quickly. However, futures couldn’t build upon Tuesday’s strong advance overnight, due in part to the fact that export prospects remain poor. Having the dollar climb to fresh highs reminded traders of the relative expense of U.S. wheat. May CBOT wheat slumped 4.75 cents to $5.0125/bushel in early Wednesday trading, while May KC wheat sagged 4.0 cents to $5.3125/bushel, and May MWE wheat drooped 3.75 to $5.67.
A technical break probably exaggerated Tuesday’s CME cattle losses. Although cattle futures have performed very well lately, the nearby April future dipped back below its 40-day moving average Tuesday morning. That triggered active selling since the 40-day MA is often viewed as pivotal for markets. The whole cattle/feeder complex then followed April lower. Choice cutout rose strongly Tuesday afternoon, but downward momentum seemingly bodes ill for today’s opening. April cattle futures plunged 2.40 cents to 151.05 cents/pound at Tuesday’s close, while August cattle tumbled 1.60 cents to 142.07 cents/pound. Meanwhile, April feeder cattle futures dropped 1.37 cents to 202.72 cents/pound, and August feeders tanked 1.82 to 200.87.
Spot weakness apparently depressed hog futures. The cash hog markets are apparently losing their upward momentum, which probably reflects persistent pork weakness. The April contract’s inability to hold above its short-term moving averages likely triggered additional selling yesterday, despite the fact that the losses carried it below the CME index. Afternoon reports & GLOBEX action suggest further slippage this morning. April hog futures fell 2.07 cents to 65.60 cents/pound in late Tuesday action, while June hogs plummeted 2.52 to 80.52.
The cotton market is following through upon Tuesday’s ICE losses. Yesterday’s stock market drop seemed to weigh somewhat upon cotton futures, but that influence might easily have been overlooked in the wake of a major reduction to China’s 2015/16 cotton production forecast made by a respected U.S. firm. One has to suspect the reduced projection still exceeded industry expectations. Tuesday’s poor reaction continued overnight as fresh U.S. dollar strength and weakness in equity index futures depressed the commodity sector. May cotton declined 0.22 cents to 63.41 cents/pound shortly after sunrise Wednesday, while December futures sank 0.41 to 64.71.