Investor fears of governmnet access to acccounts sink markets

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Corn futures fell moderately Monday morning in response to investor concerns about the global financial situation. A proposed deal to alleviate the economic crisis in Cyprus (which has been caught up in the Greek situation) includes a direct levy upon the savings accounts of Cypriot citizens. Investors worry about the precedent this would set for governments everywhere, so they are apparently reducing their holdings in global financial and commodity markets. May corn fell 6.5 cents to $710.5/bushel late Monday morning, while December dipped 4.0 cents to $5.5775.

The idea that governments and institutions could directly tap consumer accounts with financial institutions, as implied by the proposed Cyprus bailout deal, sent the financial markets lower Monday morning. The equity markets led the way lower, with most commodities following them downward. Soybean futures certainly were not immune to the downward pressure, despite news that frost may have diminished the yield potential of some Argentine bean fields over the weekend. Talk of diminished demand did not help the situation. May soybeans sank 21.5 cents to $14.045/bushel in late-Monday morning action, while May soyoil skidded 0.66 cents to 49.25 cents/pound, while May meal slumped $5.7 to $413.1/ton.

Wheat futures also declined in reaction to the uncertainty created by the proposal to directly levy Cypriot consumer savings accounts Monday morning. Wire service sources also cited the improved precipitation received by larger areas of the Southern Plains lately, as well as a recent forecast for large global wheat production this year. May CBOT wheat futures dropped 16.75 cents to $7.0625/bushel as lunchtime loomed Monday, while May KCBT wheat lost 12.5 cents to $7.39, and May MGE futures slid 10.75 cents to $7.855.

Cattle futures ended last week badly and seemed likely to move lower in response to the Monday morning sell-off sparked by talk of governments directly accessing consumer accounts for funds (as implied by the proposed Cyprus debt deal). However, the nearby April contract actually bounced from a weak opening, possibly in response to a news item suggesting consumer demand at grocery stores is improving. April cattle rose 0.30 cents to 126.07 cents/pound around midsession Monday, while August slipped 0.07 cents to 122.45. Meanwhile, April feeder cattle slumped 0.30 cents to 138.80 cents/pound, and August moved 0.27 cents lower to 147.75.

Hog futures declined as expected in reaction to the implications of the Cyprus bailout proposal, since that included a provision potentially allowing government officials to directly levy funds from consumer financial accounts. The general financial market breakdown apparently caused swine traders to forget the big Friday afternoon surge in pork cutout values; that news could support futures this week if it persists. April hogs lost 0.50 cents to 79.17 cents/pound late Monday morning, while June dipped 0.32 cents to 89.00.



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