U.S. dollar weakness supported commodity futures Thursday night

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Dollar weakness boosted commodities Thursday night. Russia’s central bank devalued the U.S. dollar versus the euro overnight, which sent the greenback tumbling against numerous currencies. The implied reduction in the international cost of American goods sparked concurrent gains in the ag commodities. Corn futures rose slightly despite renewed concerns over Chinese rejections of U.S. corn and distillers grains. March corn futures stabilized at $4.2625/bushel in early Friday trading, while May edged 0.25 cent higher to $4.3475.

Soybeans benefited significantly from the dollar weakness. Given the relatively tight soy situation, it wasn’t terribly surprising to see beans and product prove somewhat stronger than corn and wheat overnight. Indeed, numerous traders probably viewed Thursday’s drop as being overdone. January soybeans bounced 5.25 cents to $13.24/bushel in pre-dawn Friday action, while January soyoil gained 0.07 cents to 38.94 cents/pound, and January soymeal added $2.3 to $443.3/ton.


The wheat markets were mixed early Friday morning. Mixed prospects for Northern Hemisphere winter wheat and spring wheat in South America may lie at the heart of the mixed price action experienced Thursday night. That is, Southern Hemisphere conditions seem to be improving, whereas traders worry that some U.S. winter wheat could be damaged by frigid weather expected next week. March CBOT wheat futures slipped 0.5 cent to $6.055/bushel as Friday dawned over Chicago, while March KCBT wheat futures slid 1.25 cents to $6.4325, and MWE futures dipped 1.0 to $6.3725.


Premiums built into cattle futures seemingly undercut prices. U.S. beef exports may also benefit from a weaker greenback, but futures set back from early-morning highs. Wholesale prices proved generally weak yesterday. Ultimately, cattle traders had already built bullish expectations for into CME values, which may explain the early slippage. February cattle futures skidded 0.02 cents to 134.12 cents/pound in early Friday trading, while April futures dipped 0.10 to 134.87. Meanwhile, January feeder cattle futures climbed 0.22 cents to 166.82 cents/pound, and March advanced 0.12 to 167.32.


Cash strength likely boosted hogs. Direct market hog prices rose substantially Thursday, while pork values edged moderately higher. Those developments almost surely boosted CME futures overnight, although dollar weakness probably encouraged bulls as well. We probably shouldn’t look for any big hog moves today, since the quarterly USDA Hogs & Pigs report is set for release at 2:00 PM CST today. February hog futures ran up 0.12 cents to 85.42 cents/pound around dawn Friday, but June sagged 0.17 to 99.92.

Cotton futures surged in apparent response to Chinese news. Given the strong American position in the cotton export market, it was terribly surprising to see the fiber market respond well to the overnight dollar drop. However, Chinese officials also announced that they are abandoning their long-standing cotton stockpiling program, which seemed to spark a breakout to the upside. Actually, the announcement might be viewed favorably by both bulls and bears, but bulls are seemingly winning this round. March cotton soared 1.34 cents to 84.23 cents/pound just after sunrise (EST) Friday, while July cotton jumped 0.84 cent to 83.46.


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