Wednesday’s Fed news continued supporting commodities overnight. Most other considerations took a back seat to Wednesday’s Federal Reserve announcement that it will ‘taper’ off its program of buying $85 billion in U.S. bonds each month. They worry about the impact on the economy if they do so. Stocks and commodities surged on the news and continued rising overnight. Concurrent U.S. dollar losses also favor higher commodities. December corn climbed 4.75 cents to $4.61/bushel early Thursday morning, and May rose 5.75 cents to $4.8275.
Soybeans sustained their Wednesday advance into Thursday morning. The soy complex was not at all immune to the Fed action and its impact upon the markets. The equity market surge implies persistent economic strength and stronger domestic demand during the weeks and months ahead. Conversely, the resulting U.S. dollar decline makes American goods cheaper on international markets, thereby boosting export demand. November soybeans jumped 11.25 cents to $13.59/bushel in early Thursday action, while October soyoil gained 0.08 cents to 42.55 cents/pound, and October soymeal ran up $5.4 to $432.4/ton.
Wheat futures also reacted well to the Fed news. The wheat market rallied in concert with corn and soybeans. Indeed, the golden grain surge largely matched that posted by the beans. 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. December CBOT wheat advanced 11.0 cents to $6.575/bushel around dawn Thursday, while December KCBT wheat leapt 11.5 cents to $7.04, and December MGE futures moved up 10.0 cents to $7.1025.
Cattle futures also rallied in response to the Fed announcement. Although modest wholesale gains posted Wednesday afternoon probably played a role in overnight cattle market gains, the Fed news was probably the main driver of the rise. That is, rising equity markets and dollar weakness are routinely viewed as bullish for domestic and foreign demand, respectively. October cattle futures advanced 0.62 cents to 125.90 cents/pound early Thursday morning, while December added 0.70 to 129.65. Meanwhile, October feeder cattle bounced 0.60 cents to 158.90 cents/pound, and January improved 0.52 cents to 159.45.
Cash weakness seemingly undermined hog futures Wednesday night. Hog futures also reacted well to the bullish implications of Wednesday Fed news. However, prices actually declined modestly overnight. That probably reflected disappointing results on the afternoon pork reports and surprising cash market losses in the western Corn Belt. October hog futures sagged 0.22 cents to 91.50 cents/pound as trading accelerated Thursday morning, while December was steady at 87.95.
Cotton futures proved comparatively weak Thursday morning. The Fed news and the financial market reaction to it seemed likely to boost cotton prices substantially, since these developments all may prove very supportive of forthcoming apparel demand. Traders may be looking for a weak result on the weekly Export Sales report later this morning, since the totals posted the previous two weeks were quite large. December cotton slipped 0.03 cents to 85.51 cents/pound just after sunrise Thursday, while March inched up 0.09 to 85.23.