February 8 – Increased concerns over the domestic and global economy continue to dominate trade this morning. The Dow Jones Industrial Average has been down nearly 400 points at times, with crude oil fluctuating near the $30 per barrel level. Gold is sharply higher this morning to seven-month highs providing further evidence of the safe-haven buying prevailing today.
Traders are reluctant to be long the broader commodity sector amid fears that a sluggish economy will negatively impact demand. The grain and oilseed sector has occasionally attempted to separate itself from the broader commodity sector, but in general it still lacks a sufficient story to pull away at this point. South American weather is generally more favorable this week following good Argentine rains over the weekend.
The focus for the Ags at this point is now on tomorrow morning’s USDA monthly crop report. USDA is expected to revise its export targets lower for corn, soybeans and wheat in tomorrow’s report, reflecting that weaker demand. Traders will also be watching for adjustments in South American corn and soybean production estimates, although more meaningful adjustments are expected in March. Even so, the outside markets continue to be the dominant factor in this morning’s trade.
Live cattle futures are down the daily limit this morning. Product prices are mixed on typically sluggish Monday volume. Last week’s cash trade proved disappointing in both price and volume, providing little fodder to justify moving against the tide of economic concerns present in the financials. Cash hogs are mostly steady today, with the product market mixed to weaker at midday. Decent fundamentals underpin the lean hog futures market in the face of selling in many of the other markets, although the April contract turned lower after failing to test overhead chart resistance.
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