Ag markets are mixed early Tuesday morning

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Concerns about the strength of Chinese demand continued weighing upon the ag markets, including corn Tuesday morning. Monday morning news of a big March cutback in grain imports was followed by a weak economic report (Purchasing Managers Index: PMI) early today. The slow planting progress report (4% versus 16% five-year average) was well anticipated. May corn dipped 1.75 cents to $6.44/bushel early Tuesday morning, while December fell 4.75 cents to $5.2825.

The soy complex was decidedly mixed early Tuesday morning. The weak Chinese PMI report probably weighed upon the legume complex to some extent, but the persistence of recent country strength, with a positive basis (cash minus futures) in many areas apparently boosting beans and meal. May soybeans rose 5.5 cents to $14.2275/bushel Monday night, while May soyoil slipped 0.02 cents to 48.60 cents/pound, and May soybean meal gained $3.2 to $413.2/ton.

Ideas that recent moisture has improved spring wheat production prospects have apparently overruled arguments that the cold has badly damaged the winter wheat crop. Weak Chinese news has seemingly encouraged bears as well. May CBOT wheat futures fell 6.75 cents to $6.955/bushel early Tuesday morning, while May KCBT wheat tumbled 5.5 cents to $7.34 and May MGE futures lost 2.25 cents to $8.165.

The result of the Monday afternoon USDA Cold Storage report was not encouraging for cattle traders, since it stated March 31 U.S. beef stocks at a record (513.2 million pounds) for late March. Conversely, beef cutout values rose modestly Monday, which may explain the modest rise in nearby futures. Bulls probably need to see more signs of demand strength before they will be willing to push the deferred contracts higher. June cattle were unchanged at 120.82 cents/pound in pre-dawn Tuesday trading, while December declined 0.30 cents to 125.85. Feeder cattle futures rose in opposition to grain weakness, with the most-active May contract climbing 0.40 cents to 139.00 cents/pound and August adding 0.42 cents to 146.40.

The Cold Storage report was not particularly supportive of hog futures Monday afternoon, although the latest report did fall somewhat short of the March record from 2008. Conversely, western Corn Belt hog prices and pork cutout values rose substantially, thereby raising hopes that the long anticipated seasonal demand surge is finally getting underway. May hog futures rose 0.07 cents to 87.65 cents/pound in early Tuesday morning electronic trading, while the June contract gained 0.17 cents to 89.62.

After proving surprisingly firm Monday, cotton futures declined in concert with the grains early Tuesday morning. The late decline is not terribly surprising when one considers the manner in which Chinese actions have affected the market in recent months and the potential for a slowdown in their aggressive buying in the wake of the weak March PMI report. May cotton dropped 0.40 cents to 83.93 cents/pound in overnight electronic action, while December lost 0.38 cents to 85.81.

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