Corn futures closed sharply lower. Outside markets were all negative. The DJIA, crude oil and gold prices area all closed lower and the dollar closed higher. Why? Because overnight news on the financial crisis facing Europe worsened badly overnight. The EU’s strongest economy, Germany, held a bond auction of its own that was nothing short of “disaster” according to analysts in London. Nearly 40% of the $6 billion in German bonds offered found no takers at all. And why? Because interest rates being charged for new loans to Spain hit a new record high; a level Spain cannot pay without default and Germany is thought to be on the hook for much of that debt if they do default, which in turn makes German debt too risky for global investors! Ahead of the long holiday break, traders just didn’t want to carry risk. December closed down 10 ¼ cents at $5.88 3.4, the lowest spot price since Oct. 4th. March closed down 10 ¼ at $5.95 ½.

Soybean futures closed sharply lower Wednesday, joining a broad sell-off from the opening bell after new bearish news from Europe and China left market bulls without much to be thankful for.  Traders said today’s bogeyman was the rise in the dollar, which hurts export demand for U.S. goods in general, but commodities in particular. The deepening pessimism about the European financial crisis was behind today’s strength in the dollar. But there’s additional reason for worry about sagging export demand for soybeans.  China is the biggest customer by far for U.S. soybeans and the news from China overnight wasn’t good either. Chinese manufacturing shrank to the lowest level in 32 months this month. That scares the bejeebers out of global investors because China’s ongoing economic growth is the vital engine for leading a global economic recovery and now even that engine is sputtering. January beans closed 30 ½ cents lower at $11.22 ½ ; March down 31 ¼ at $11.31 ½.

Wheat futures also closed sharply lower, with double digit losses at all three exchanges.  Once again Minneapolis futures were down the most on continued unwinding of short Chicago/long Minneapolis spreads. Fierce and relentless discount pricing of wheat exports from the Black Sea region and Australia in addition to a rising U.S. dollar is keeping U.S. wheat “uncompetitive” in spite of big declines in our own prices the past few weeks. It’s so overpriced that in a recent tender for wheat by Egypt, U.S. suppliers didn’t even bother to offer a bid. Canada is increasingly competitive as well. Even French wheat suppliers are complaining they can’t compete with Canadian wheat in their own backyard markets. CBOT December closed 15 cents lower at $5.79; KCBT December 12 cents lower at $6.49, and MGE December down another 25 cents $8.46.

Cattle futures closed steady to lower on a sudden break in cash cattle bids of more than $2 per cwt. ahead of the holiday. But overall, considering the sharp losses in the other commodities, cattle charts are still in uptrends after key uptrend line support held on Monday’s sharp break, followed by a close near the highs on Monday and another good gain on Tuesday.  However, with today’s break in cash bids, futures are no longer at a discount to cash, that’s gone. Further, cash bids are vulnerable to any decline whatever in retail demand. Why? Because packers are still losing money on every animal processed. The negative margin shrank some more today, but it’s still negative … just a lot LESS negative than it was a week ago. , just much better than a week ago when packers were losing nearly $88 per head!  The spot December contract closed unchanged at $121.45, but February futures closed 55 lower at $122.55 and more distant contracts as much as $1.05 lower

Lean hog futures closed higher in the front months on Wednesday, one of the few commodities to make that claim. We credit higher bids for cash hogs and positive chart signals. Nationally, cash hog bids were $1.17 per cwt higher after evidence yesterday that recent declines in cash bids may have bottomed out. Exports are firm and there’s talk China may need to keep importing aggressively to control inflation in pork prices in that country. Pork is the staple meat in Chinese diets and out-of-control inflation leads to social unrest that Beijing officials don’t want to deal with; especially in a cash rich country that can easily afford to import whatever it wants in whatever quantity it wants. December hogs closed 20 cents higher at $88.02, February 42 ½ cents high at $91.53. Beyond February, however, all hog contracts closed slightly lower.

Cotton futures closed mixed Wednesday. After such a sharp break Monday and yesterday, profit-taking was the order of the day in the front contract, but later contracts all closed lower again. The bearish news overnight about the Chinese economy slowing is feeding pessimism about demand into 2012. The chart damage is severe and the trend clearly lower. December cotton closed 71 cents higher at $90.71 per cwt., with March closing 21 cents lower at $90.71 and losses rising the further out you went to October, which closed $1.89 lower at $91.24. That clearly reflects growing pessimism about the demand outlook for 2012.