Ag markets diverged significantly Friday afternoon

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The equity and U.S. dollar markets proved quite strong again Friday, but commodity traders seemed to pay more attention to the negative demand aspects of the greenback rally than to the economic strength implied by stock gains. As for corn, persistent old crop tightness continued supporting nearby futures, while optimism about plantings this week weighed upon deferreds. July corn surged 11.25 cents to $6.5275/bushel in Friday trading, while December dipped 4.5 cents to $5.195.

Continuing tightness of old crop supplies apparently sent nearby soybean futures sharply higher Friday despite the negative export demand implications of the rallying U.S. dollar. The greenback advance may also increase the chance of soybean imports during the days and weeks ahead. Deferred futures also rose despite the prospect of rainy Corn Belt weather over the weekend (and, ultimately, the potential for late-season switching to soybean plantings). July soybeans jumped 21.0 cents to $14.485/bushel at its Friday close, while July soyoil was steady at 49.52 cents/pound, and July soybean meal leapt $10.2 to $425.1/ton.

Wheat futures seemed to suffer Friday from the ongoing dollar rally and its potential for curtailing export demand. Other price shifts may simply have reflected the impact of wet weekend forecasts for the central U.S. That is, increased moisture in the west could improve the winter wheat harvest, thereby weighing upon Chicago and Kansas City prices. On the other hand, wet fields in the Northern Plains could slow spring wheat plantings and reduce production prospects for that region. July CBOT wheat futures slipped 4.5 cents to $6.8325/bushel in Friday morning trading, and July KCBT wheat dropped 5.25 to $7.3725, while July MGE futures were unchanged at $8.0375.

Cash cattle prices weakened late this week, which apparently undercut CME values ahead of the weekend. The pessimism was particularly surprising when viewed in light of record choice beef cutout, but traders seemed more concerned about the belated demand impact of soaring prices than their short-term bullish impact. The monthly USDA Cattle on Feed report released after the close, seemed somewhat bearish since April placements topped average forecasts. June cattle fell 0.50 cents to 119.40 cents/pound at its Friday settlement, while December slid 0.75 to 123.52. Meanwhile, August feeder cattle futures plunged 1.75 cents to 143.37 cents/pound, while November tumbled 1.20 cents to 149.20.

Strong wholesale gains and persistent increases by the CME lean hog index boosted CME hog futures Thursday and again early Friday morning. However, the news that Canadian officials may soon institute retaliatory tariffs on U.S. products in the COOL dispute seemed to undercut CME futures around midsession. Unconfirmed rumors of a pig disease in the Corn Belt may have added to the downward pressure. June hog futures closed 1.35 cents lower, at 91.52 cents/pound Friday afternoon, while December futures edged 0.05 cents higher to 77.40.

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