The U.S. dollar index has moved to its lowest level since May in reaction to the Federal Reserve’s bold plan to purchase $40 billion in mortgage-backed debt each month for an unspecified amount of time. Crude oil along with the Continuous Commodity Index and the U.S. stock market are seeing strong gains.
Corn futures have firmed to post gains of 8 to 9 cents in most contracts.
Positive outside markets are providing a boost to corn futures, as traders fear a weakening U.S. dollar index could encourage foreign end-users to cover near-term corn needs.
But this is countered by news Argentina will increase its 2011-12 corn exports by 2.75 million metric tons (MMT) to 16.45 MMT, which should help ease tight global supplies.
Also, with combines actively rolling, harvest-related hedge pressure should limit the corn market’s upside until half the crop is in the bin.
Gulf corn basis is steady this morning.
Soybean futures slightly extended gains with the open of pit trading. Futures are enjoying double-digit gains.
Sharp dollar weakness could heighten already strong soybean demand. Thus, the market is actively working to raise prices to a level that will slow use.
Old- and new-crop carryover levels are very tight.
NOPA soybean crush in August of 124.8 million bu. fell short of expectations but it was well above last year. Plus, soyoil stocks of 2.168 billion lbs. were tighter than expected.
Gulf basis levels were steady to higher this morning -- in line with the recent trend. This signals supplies are not readily available to meet strong demand needs.
Wheat futures have improved to trade mostly 20-plus cents higher in Chicago and Kansas City. Minneapolis wheat is seeing lighter double-digit gains.
Traders believe weakness in the U.S. dollar index makes U.S. wheat more competitive on the global market.
Plus, recent aggressive exports from the Black Sea region indicate a slowdown will likely occur by November as severe weather has depleted the region’s crop.
Dry conditions in Australia and the U.S. southern Plains are also a source of concern.
Live cattle futures are off to a mixed start, with nearbys weaker and deferred months firmer on bull spread unwinding. Feeder cattle futures are slightly to moderately lower.
The cattle market is seeing some pre-weekend profit-taking today as nearby contracts are at a premium to this week’s $126 to $127 cash cattle trade.
But downside risk is limited as supplies are expected to tighten through year-end and sharp dollar weakness is supportive.
Plus boxed beef demand remains solid. Yesterday, Choice cuts slid 31 cents but Select cuts firmed 25 cents. Movement impressed at 241 loads.
Gains in the corn market are weighing on feeder cattle futures.
Lean hog futures are slightly to moderately higher with deferred months leading to the upside.
Lean hogs are benefiting from short-covering on a sharply weaker dollar and hopes that a seasonal low is near. The pork and cash hog market have shown some signs of stabilizing.
Yesterday, the pork cutout value rose 2 cents and movement was decent at 91.3 loads, adding to such ideas. This morning, cash hog bids are mostly steady.
But buying interest is being limited to short-covering as weekly pork production is expected to be record-large for September and supplies typically continue to build into December or January.
Also limiting gains is the fact that nearby futures hold a multi-dollar premium to the cash hog index.
