Johnston Pro Farmer Senior Markets Editor
as of 7:00 a.m. CT
Traders don't like
the 'R' word... Just the mention of the possibility we're in or entering
a recession put a lot of fear in the commodity markets yesterday. Financial markets
again yesterday posted significant declines as traders became more convinced that
a recession is a significant risk in the U.S. and potentially the world. And they
are unconvinced the rescue efforts taken thus far to prop up banks around the
globe are addressing the recessionary signs that are flashing.
Commodity traders fear a recession would significantly lower demand. We've
seen sharp price declines in the livestock markets as traders are concerned retailers'
buying patterns are changing (lower-priced cuts). Grain traders fear a global
recession would sharply trim export demand. It will take more confidence in the
economy to help commodity markets find support levels.
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Opening calls. These calls originate
more than three hours before the open -- use caution, things change:
Corn: 1 to 4 cents lower. Futures saw light spillover pressure overnight
from yesterday's losses. Futures closed 20-plus cents lower yesterday, posting
a low-range close. Talk of economic recession has traders on the defensive as
they liquidate positions and convert investments to cash. December corn futures
dropped below the psychological $4.00 level and spiked support at the October
2007 low of $3.86 3/4, but closed above that level.
Soybeans: 9 to 17
cents lower. Futures saw spillover pressure overnight, with deferreds leading
losses. Crude oil was lower again overnight. Futures closed 38 to 41 cents lower,
doing more technical chart damage yesterday. January beans gapped below the $9.00
level on yesterday's open to set off a round of sell stops. Futures extended losses,
but closed about 10 cents off the session low. Next support lies at the August
2007 low of $8.33 and extends to the contract low of $8.15.
4 to 7 cents lower. Futures saw spillover pressure overnight from yesterday's
losses. The dollar was stronger again overnight. Futures saw sharp spillover pressure
from neighboring corn and soybean pits and outside markets to close 17 to 18 cents
lower in the Chicago market. Early pressure came from outside markets. The dollar
was higher and crude oil moved to a new-for-the-move low.
Cash cattle expectations: $2 lower.
Wednesday's sharp drop in cattle futures resulted in some light cash cattle
trade in the Plains at $90, which is down $2 from the bulk of last week's cash
trade. Followthrough cash sales are possible at similar levels today.
Futures call: Steady to weaker. Futures are called to open weaker based
on yesterday's low-range close, but are due for short-covering. Building financial
concerns hammered cattle yesterday, as the stock market was under sharp pressure.
December live cattle futures dropped through support at last week's lows to mark
a new contract low.
hog expectations: Lower. Look for the cash market to continue lower
through the week unless pork sees a surprising recovery. Supplies are plentiful
and packers are working on improving profit margins. Pork cutout values dropped
$2.96 yesterday, which could result in some locations dropping bids by $3 today!
Futures call: Steady to weaker. Like cattle, futures are called to open
weaker based on yesterday's low-range close, but are due for short-covering. Talk
of a recession is raising concerns about meat demand. December lean hog futures
posted a new contract low after hitting a round of sell stops on the move lower.