Dollar strength is depressing the whole commodity sector. The monthly Employment report looked quite favorable, thereby suggesting the Fed will soon begin raising domestic interest rates. That interpretation not only depressed the equity markets, it sent the dollar soaring and badly undercut the commodity sector. The corn market was no exception. May corn futures sank 5.5 cents to $3.85/bushel around midsession Friday, while December lost 4.5 to $4.095.
Soy meal again diverged from sliding bean and oil quotes this morning. As with the whole commodity sector, the surging U.S. dollar is undercutting soy export prospects, along with CBOT prices. Of course, the bean and product outlook is also suffering from the South American harvest and the big increase in global supplies. Nevertheless, vigorous demand still seems to be supporting meal quotes. May soybean futures declined 6.0 cents to $9.795/bushel late Friday morning, while May soyoil dropped 0.37 cents to 31.20 cents/pound, but May meal stalled at $325.2/ton.
The wheat markets proved surprisingly firm Friday morning. The wheat market has suffered substantial losses this week as U.S. dollar strength, the global glut and relative expense of American grain depressed sentiment. However, prices were surprisingly steady this morning, which seemingly reflected pre-weekend short-covering and bargain hunting by aggressive bulls. May CBOT wheat gained 0.25 cent to $4.8075/bushel as the lunch hour loomed Friday, while May KC wheat ran up 3.5 cents to $5.205/bushel, but May MWE wheat sagged 2.0 to $5.565.
Cattle futures traded in decidedly mixed fashion Friday morning. Late Thursday news of Nebraska cattle trading steady with last week’s quotes probably supported CME futures this morning. The fact that relatively modest amounts of U.S. beef go to the international markets may also have reduced the negative impact of the dollar surge. April cattle futures had dipped 0.40 cents to 152.87 cents/pound in late Friday morning action, while August cattle slid 0.30 cents to 143.85 cents/pound. Meanwhile, April feeder cattle futures vaulted 0.65 cents to 206.02 cents/pound, and August feeders climbed 0.22 to 207.15.
CME hogs continue struggling. After rallying strongly in response to the West Coast port settlement, the cash hog markets have apparently run out of upward momentum, due largely to concurrent pork weakness. Traders likely expect pork demand to surge in the weeks ahead, but today’s U.S. dollar surge wasn’t encouraging for the export market. April hog futures dove 1.17 cents to 65.65 cents/pound just before lunchtime Friday, while June hogs tumbled 0.62 to 79.77.
The financial market moves are also depressing the cotton market. Cotton futures have not performed very well this week, so it’s not terribly surprising to see prices continue sliding this morning. That is, both the surging value of the dollar and dropping equity indexes point to reduced cotton/apparel demand from international and domestic users, respectively. The market looks technically weak as well. May cotton slumped 0.67 cents to 62.56 cents/pound shortly before noon (EST) Friday, while December futures drooped 0.65 to 64.09.