Dollar weakness is boosting the ag markets. Equity markets surged again this morning, whereas the U.S. dollar suffered a sharp drop. Both of these shifts are usually viewed as supportive of commodity demand and prices, which may be partially responsible for Tuesday’s early crop market surge. Talk that may allow the markets to exert more influence over its domestic ag prices also seemed bullish for corn. March corn rallied 13.5 cents to $3.8325/bushel around midsession Tuesday, while July added 12.75 to $3.9825.
The soy complex posted a broad advance as well. Today’s combination of equity index and energy sector gains and U.S. dollar weakness apparently spurred strong soy buying. Deflationary ideas have seemingly gone out the window, as have concerns about large South American crops. The soy demand outlook does seem promising at this point, although wire service sources cited technical buying for much of the morning rally. March soybean futures soared 28.5 cents to $9.88/bushel as the lunch hour loomed Tuesday, while March soyoil advanced 0.53 cents to 30.94 cents/pound, and March meal vaulted $11.1 to $339.0/ton.
The wheat markets also surged Tuesday morning. Equity strength, dollar weakness and the Chinese news also appeared to encourage wheat bulls this morning. But the golden grain rally was doubly impressive since it occurred soon after U.S. wheat was shut out of the latest Egyptian tender. Wire service stories also cited technical buying for abetting the rise. March CBOT wheat surged 17.5 cents to $5.1025/bushel late Tuesday morning, while March KC wheat jumped 20.0 to $5.545/bushel, and March MWE wheat leapt 21.5 to $5.755.
Cattle futures continue struggling. The generally bearish implications of last Friday’s biannual Cattle inventory report seemed to continue weighing on cattle futures this morning, since it suggested significantly larger fed cattle supplies during the coming months. Wholesale prices and outside markets look supportive, but CME traders seem to be ignoring those factors at the moment. April live cattle futures fell 1.40 cents to 148.20 cents/pound in late Monday morning action, while August cattle dove 1.60 cents to 140.02 cents/pound. March feeder cattle futures plummeted 4.72 cents to 195.82 cents/pound and May feeders plunged 4.37 to 197.25.
Talk of spot weakness is exerting fresh pressure on CME hogs. Chicago traders and many in the hog/pork industry continue looking for a seasonal price reversal. However, spot prices have persistently refused to bottom, as exemplified by the fresh weakness seen this morning. April hog futures dropped 0.77 cents to 70.15 cents/pound shortly before lunchtime Tuesday, while June hogs slumped 0.80 cents to 82.32.
Cotton futures may be breaking out to the upside. The cotton market has recently staged a surprising rally in the face of technical resistance. Traders are optimistic about the global outlook, especially if recent equity index gains truly presage robust demand and analysts are correct in predicting big 2015 planting reductions. Early dollar losses and Chinese news also encouraged buying. Having the March contract push above the 60-cent level is almost surely spurring follow-through buying. March cotton futures climbed 1.51 cents to 61.40 cents/pound shortly after noon (EST) Tuesday, while the July contract ran up 1.11 to 62.08.