Surging U.S. dollar values weighed on ag markets Friday morning

The surging dollar may be undercutting commodities. The soy complex remained generally strong Friday morning, but that support couldn’t keep the grain markets from sliding. Prospects for good harvest may be weighing on corn but today’s big U.S. dollar jump is very likely depressing the commodity markets, particularly those with big export exposure. December corn futures slumped 3.25 cents to $3.7075/bushel late Friday morning, while May lost 4.0 to $3.9175.

Dollar strength appeared to short-circuit the early soy advance. Although the U.S. is harvesting a massive soybean crop, that isn’t translating into lower prices. Reports of slow farmer selling and the tight rail situation spurred renewed gains last night. However, the soy complex has set back sharply from the overnight highs; the reversal can probably be blamed on the big dollar surge. November soybean futures had risen 4.25 cents to $10.285/bushel in late Friday morning action, while December soyoil moved up 0.19 cents to 34.50 cents/pound, and December soymeal gained $6.0 to $386.0/ton.

Talk of renewed Russian seemingly triggered Friday’s wheat reversal. Early wire service reports indicated Russian wheat is once again entering the glutted global market after several weeks of absence. That news, along with the U.S. dollar rally, is apparently weighing heavily upon U.S. wheat futures. December CBOT wheat fell 11.0 cents to $5.25/bushel around midsession Friday, while December KC wheat dove 13.75 to $5.8825/bushel, and December MWE wheat declined 10.0 to $5.6775.

Cattle futures suggest weak cash market talk. Cattle futures opened firmly Friday morning, but have subsequently fallen sharply. One might blame the bearish influence of the surging dollar, but it seems more likely that traders are hearing negative things from cash market negotiations. December live cattle futures plunged 1.40 cents to 165.92 cents/pound just before lunchtime Friday, while April futures dropped 0.67 to 165.50. Meanwhile, November feeder cattle futures stumbled 0.10 cents to 234.12 cents/pound, and January feeders slid 0.32 cents to 228.15.

Talk of stable cash prices may be encouraging hog bulls. Diving cash and wholesale quotes have weighed heavily upon CME hogs lately. However, the late-week stability now being reported may be seen as signaling a relative tightening of supplies and firmer short-term prices. December hog futures bounced 0.20 cents to 87.40 cents/pound late Friday morning, while April hogs skidded 0.20 to 87.85.