Ag markets diverged rather significantly Thursday

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The grain markets remained strong Thursday. Although the equity indexes set back from their early highs and the dollar bounced from its lows, numerous commodity markets, including corn futures, sustained their bullish reactions to Wednesday’s Fed news. Ultimately, expectations for improved demand in the changed environment are supporting commodity values. December corn climbed 3.25 cents to $4.595/bushel at Thursday’s close, and May rose 3.25 cents to $4.8025.

The soy complex beans turned mostly lower as Thursday passed. Despite the supportive implications of the Fed announcement that it will not taper its quantitative easing program in the near future, soybean and product futures were mixed Thursday. The weekly Export Sales report also seemed modestly bullish. Improved Corn Belt weather reportedly undercut soybeans, whereas active traders lifting of meal/oil spreads depressed the former and boosted the latter. November soybeans closed 8.25 cents lower at $13.395/bushel Thursday afternoon, while October soyoil gained 0.24 cents to 42.75 cents/pound, and October soymeal skidded $5.4 to $421.6/ton.

Wheat futures also sustained their post-Fed rally. The wheat market surge largely exceeded the gains posted in the corn pit. That may stem from expectations for much improved export demand, since many felt that high U.S. prices would limit sales to a glutted global market this winter. The strong result on the weekly Export Sales report probably reinforced bullish ideas. December CBOT wheat jumped 10.5 cents to $6.57/bushel in late-Thursday trading, while December KCBT wheat surged 9.5 cents to $7.02, and December MGE futures moved up 8.25 cents to $7.085.

Cattle futures also rallied in response to the Fed announcement. Modest wholesale gains probably played a role in subsequent CME strength, but the Fed news was probably the main driver of the Chicago rise. That is, rising equity markets and dollar weakness are thought to encourage domestic and foreign beef demand, respectively. October cattle futures advanced 0.65 cents to 125.92 cents/pound at its Thursday settlement, while December added 0.77 to 129.72. Meanwhile, October feeder cattle leapt 1.07 cents to 159.37 cents/pound, and January surged 1.05 cents to 159.97.

Cash weakness seemingly undermined hog futures again Thursday morning. Hog futures also posted a strong reaction to the bullish implications of Wednesday’s Fed news. However, CME prices have since declined. That probably reflects disappointing cash market losses Wednesday and mediocre calls again this morning. October hog futures settled down 0.57 cents at 91.15 cents/pound Thursday, while December fell 0.65 cents to 87.30.


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