Corn futures reversed despite supporting Tuesday morning news. Corn futures sustained their recent advance Monday night and initially reacted well to USDA news of a sizeable sale. However, prices turned decidedly lower soon thereafter, with losses accelerating after the March future failed at 40-day moving average support. The equity market reversal and U.S. dollar strength may have exaggerated the selling. March corn futures dove 16.25 cents to $3.8575/bushel at Tuesday’s close, while July lost 16.5 to $4.0025.
The soy complex also lost ground Tuesday. Talk of persistently strong demand seemingly boosted the soy complex Monday night, but beans and meal turned lower in concert with the grain markets. Oil followed them lower late in the day. The reason for the reversal wasn’t readily apparent, but one has to wonder if the ag markets are finally recognizing the size of the recent dollar advance and its potential to reduce exports. The bearish equity reversal wasn’t encouraging either. March soybean futures settled 12.0 cents lower at $10.04/bushel, while March soyoil slipped 0.06 cents to 32.54 cents/pound, and March meal sank $7.6 to $333.6/ton.
The wheat markets followed corn and beans lower. Yesterday’s reports were net bearish for the wheat outlook, but futures rebounded strongly last night in reaction to news that Russian officials are tightening their curbs on that country’s exports. However, as with corn and soybeans, the golden grain couldn’t sustain the move, possibly due to diminishing U.S. export prospects as the dollar rises. March CBOT wheat slumped 7.5 cents to $5.48/bushel in late Tuesday trading, while March KC wheat tumbled 8.75 cent to $5.8175/bushel, and March MWE wheat sagged 6.75 to $5.885.
Cattle futures broke down once again Tuesday. Persistent beef gains again supported cattle futures in early Tuesday trading, but the tide turned bearish soon thereafter and swamped the market by the end of the day. Traders cited active fund selling for the breakdown. We believe commodity traders expect a deflationary commodity environment in the wake of the recent energy sector breakdown. February live cattle futures crashed the 3.0-cent daily limit to 157.45 cents/pound at Tuesday’s CME settlement, while the April contract plummeted 2.95 cents to 156.40. January feeder cattle futures plunged 1.85 cents to 221.55 cents/pound, and March feeders tanked 2.37 cents to 210.92.
Hog futures were caught in the downdraft. CME hog prices resumed their recent decline soon after Tuesday’s opening, and remained weak through much of the day. Traders were apparently looking for persistent cash losses, particularly as deflationary psychology dominated the commodity markets. Mixed midday pork quotes did little to discourage bears. February hog futures ended Tuesday having fallen 1.47 cents to 75.17 cents/pound, while June hogs dropped 0.92 cents to 86.57.
Cotton futures defied the bears Tuesday. In contrast to the sell-off suffered by the other crop markets, cotton futures turned higher Tuesday morning and sustained the gains through the end of the day. The bounce seemingly reflected the early surge posted by the equity indexes (based on strong demand expectations). The fiber market’s late firmness in the face of the stock market reversal was very impressive, although rather mysterious in origin. March cotton futures climbed 0.42 cents to 60.15 cents/pound to end the Tuesday’s ICE session, while the July contract advanced 0.46 to 61.88.