Corn futures closed sharply lower on Tuesday. The market was spooked by more talk of China tightening monetary policy, which could slow demand for commodities. The U.S. dollar was up strongly. Losses were extended by technical and speculative selling despite generally bullish fundamentals. Just last week, USDA lowered its crop production estimate and lowered the ending stocks forecast to tight levels. December ended 29 cents lower at $5.26 1/2 and March was 29 cents lower at $5.40.
Soybean futures traded sharply lower on Tuesday. Strength in the dollar and continued concern that China will tighten monetary policy pushed prices lower. If they move to slow food inflation, demand for soybeans could slow. Technical selling and long liquidation added to the selling pressure. January closed 66 3/4 cents lower at $12.19 3/4 and March was 66 3/4 cents lower at $12.27.
Wheat futures were strongly lower on Tuesday. Strength in the dollar and spillover selling from corn and soybeans weighed on futures. Losses were extended by technical selling and long-liquidation. However, fundamental news is mostly bullish. USDA pegged winter wheat conditions at 46% good-to-excellent, which is up 1 point from last week but is the lowest mid-November rating in ten years. CBOT Dec ended 46 1/2 cents lower at $6.26 1/4, KCBT Dec closed 42 1/2 cents lower at $6.90 and MGE Dec was 40 1/2 cents lower at $7.05 1/2.
Cattle futures closed lower on Tuesday. The market was pressured by larger showlists this week. Boxed beef prices have been working higher, but there is concern that demand will be soft seasonally over the holidays. Weakness in corn prices were also bearish for deferred contracts as it could encourage an increase in cattle feeding. December ended 78 cents lower at $98.45 and February was 73 cents lower at $102.10.
Lean hog futures traded strongly lower on Tuesday. Futures were pressured by weakness in the cash market. Hog supplies remain ample and slaughter weights remain large. In addition, weakness in the corn market today led to ideas of higher hog production due to cheaper feed costs. December closed $1.30 lower at $68.33 and February was $1.40 lower at $73.63.
Cotton futures closed sharply lower on Tuesday, with contracts through July 2011 down the 5 cent limit. Long liquidation was triggered by concern over strength in the dollar and weakness in the euro. In addition, there was more talk that China could tighten monetary policy to control inflation. December ended 500 points lower at 133.75 cents and March was 500 points lower at 129.20 cents.