US dollar losses are boosting the commodity sector. The first estimate of first-quarter 2015 U.S. GDP came up far short of expectations, thereby weighing on the dollar and domestic equities. The greenback breakdown looks quite supportive of the commodity sector, since it suggests a commensurate drop in the cost of American goods to export customers. Corn reacted only modestly, despite what looked like a Tuesday bounce from firm chart support. May corn futures rose 0.75 cents to $3.6175/bushel late Wednesday morning, while December added 1.5 to $3.84.
The soy complex is leading the crop markets higher. Talk that accelerated spring plantings will increase the yield potential of the fall soybean crop now appears to be being offset by trader suspicions that the traditional pattern of an acreage shift toward corn in such circumstances will limit the autumn harvest. When combined with today’s dollar breakdown, midmorning soy gains look rather reasonable. May soybean futures climbed 7.5 cents to $9.85/bushel as the lunch hour loomed Wednesday, while May soyoil moved up 0.22 cents to 31.45 cents/pound, and May meal rallied $3.1 to $321.8/ton.
The wheat markets were mixed around midsession Wednesday. Wheat futures seemed to post a modest bullish reversal signal Tuesday and generally rallied overnight. However, the Chicago market had risen only modestly by lunchtime, with nearby KC quotes actually lower on the day. Those losses probably marked a Russian official’s statement that the country’s wheat export tax will soon be cancelled. The dollar drop seems very supportive. May CBOT wheat futures rose 1.0 cents to $4.725/bushel in late Wednesday action, while May KC wheat sagged 2.25 cents to $4.95/bushel, but May MWE wheat rebounded 1.5 to $5.30.
Cattle futures also edged higher. Although the U.S. is currently a net beef importer, the value and quality of U.S. sales still makes the market sensitive to big currency swings. Thus, today’s dollar weakness, as well as this week’s persistent wholesale strength, may be spurring CME cattle buying as well. June cattle futures inched up 0.15 cents to 151.27 cents/pound around midsession Wednesday, while August cattle gained 0.40 to 149.20. Meanwhile, May feeder cattle futures vaulted 0.85 cents to 213.20 cents/pound, and August feeders jumped 0.95 to 214.82.
Weight news may be exaggerating hog buying. The cash hog and wholesale pork markets continued their seasonal advance Tuesday, with some bullish technical strength seeming to carry over from Tuesday’s GLOBEX trade. Today’s U.S. dollar losses also seem supportive, but news of a big drop in hog weights last week suggests hog supplies and pork production could slow sharply during the coming weeks. June hog futures leapt 1.05 cents to 80.95 cents/pound just before lunchtime Wednesday, and December ran up 0.35 to 68.95.