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Our illustrious Washington politicians finally settled the debt ceiling debate, at literally the last minute, just in time for Standard and Poor’s to say “this is a really dumb way to do the government’s business” and lower the debt quality rating of the United States for the first time in history. That was all it took for the stock market, most of the ag markets, and soft commodities in general, to take a nose dive on Monday of this week, erasing most of the gains of the past couple of weeks before regaining some of the lost ground on Tuesday.
For most people, a 600-point freefall in the Dow Industrial Average would be enough to reevaluate their positions and maybe adjust how they approach doing the people’s business. But expect politicians to simply blame the other party and continue with business as usual until the whole country is bankrupt. Okay, deep breath, this week’s rant is concluded.
But the historic downgrade in the nation’s debt is at the heart of all the markets this week, with soybeans the leading loser. For the two week period ended Tuesday, August Soybean futures were down more than 84 cents, with the September off 87 and new-crop November down 89 cents. Most of that drop came in the last four trading sessions, with the bulk of the blame falling on politicians, with a helping of favorable weather also pressuring prices.
Corn futures were mixed for the two week period, with solid gains evident until the last three or four sessions. For the two week period ended Tuesday, September Corn futures were down nearly 12 cents, with new-crop December up almost two cents. Supply and Demand fundamentals still favor corn over the other grains, but economic factors have even corn bulls looking over their shoulders.
Wheat values were lower, as the Chicago September futures contract was down more than 22 cents for the two week period, while the December contract lost almost 31 cents. In Kansas City, the September contract was off nearly 18 cents, while the December lost nearly 20. The continued severe drought conditions in the Southern Plains lost to the economic news and credit rating downgrade, although the weak dollar did lend some support.
Livestock prices were mixed as well, with Live Cattle futures prices higher. The cash market was the main stimulus for higher fed cattle prices, as cash fed cattle traded out of feedlots at mostly $111 to $113 last week, a gain of $3-5 in one week and $6-7 in two weeks. Shortages of adequate numbers of finished cattle, and the insistence of feedlot marketers that they sell cattle at reasonable basis levels supported fed cattle values. For the two week period ended Tuesday, August Live Cattle futures were up $3.02, with October up $1.67, although December gained only 30 cents in two weeks.
Feeder Cattle prices took the brunt of the negative price action, as a combination of sharply higher corn prices, until Monday of this week, combined with the poor economic conditions and lousy feeding margins, to cause Feeder Cattle futures values to plummet. For the two week period ended Tuesday, August Feeder Cattle futures were down $2.87, with September down $3.17 and October off $3.35. Cash feeder auctions were also lower, as feeder buyers took a wait and see attitude to the economic fallout.
Lean Hog futures were mixed, with the soon to expire August contract up $4.92 for the week, while the October contract lost $2.57 and December was down $2.52. Near-term shortages of heavy hogs supported the nearby contract, while concerns about waning demand from China pressured the deferred contracts.
This Thursday, USDA releases the monthly Crop Production and Supply and Demand reports. While concerns about production problems with U.S. crops will certainly cause traders to closely study the numbers in the reports, wider economic issues will likely have at least equal billing in the next few weeks.
Our illustrious Washington politicians finally settled the debt ceiling debate, at literally the last minute, just in time for Standard and Poor’s to say “this is a really dumb way to do the government’s business” and lower the debt quality rating of the United States for the first time in history. That was all it took for the stock market, most of the ag markets, and soft commodities in general, to take a nose dive on Monday of this week, erasing most of the gains of the past couple of weeks before regaining some of the lost ground on Tuesday.
For most people, a 600-point freefall in the Dow Industrial Average would be enough to reevaluate their positions and maybe adjust how they approach doing the people’s business. But expect politicians to simply blame the other party and continue with business as usual until the whole country is bankrupt. Okay, deep breath, this week’s rant is concluded.
But the historic downgrade in the nation’s debt is at the heart of all the markets this week, with soybeans the leading loser. For the two week period ended Tuesday, August Soybean futures were down more than 84 cents, with the September off 87 and new-crop November down 89 cents. Most of that drop came in the last four trading sessions, with the bulk of the blame falling on politicians, with a helping of favorable weather also pressuring prices.
Corn futures were mixed for the two week period, with solid gains evident until the last three or four sessions. For the two week period ended Tuesday, September Corn futures were down nearly 12 cents, with new-crop December up almost two cents. Supply and Demand fundamentals still favor corn over the other grains, but economic factors have even corn bulls looking over their shoulders.
Wheat values were lower, as the Chicago September futures contract was down more than 22 cents for the two week period, while the December contract lost almost 31 cents. In Kansas City, the September contract was off nearly 18 cents, while the December lost nearly 20. The continued severe drought conditions in the Southern Plains lost to the economic news and credit rating downgrade, although the weak dollar did lend some support.
Livestock prices were mixed as well, with Live Cattle futures prices higher. The cash market was the main stimulus for higher fed cattle prices, as cash fed cattle traded out of feedlots at mostly $111 to $113 last week, a gain of $3-5 in one week and $6-7 in two weeks. Shortages of adequate numbers of finished cattle, and the insistence of feedlot marketers that they sell cattle at reasonable basis levels supported fed cattle values. For the two week period ended Tuesday, August Live Cattle futures were up $3.02, with October up $1.67, although December gained only 30 cents in two weeks.
Feeder Cattle prices took the brunt of the negative price action, as a combination of sharply higher corn prices, until Monday of this week, combined with the poor economic conditions and lousy feeding margins, to cause Feeder Cattle futures values to plummet. For the two week period ended Tuesday, August Feeder Cattle futures were down $2.87, with September down $3.17 and October off $3.35. Cash feeder auctions were also lower, as feeder buyers took a wait and see attitude to the economic fallout.
Lean Hog futures were mixed, with the soon to expire August contract up $4.92 for the week, while the October contract lost $2.57 and December was down $2.52. Near-term shortages of heavy hogs supported the nearby contract, while concerns about waning demand from China pressured the deferred contracts.
This Thursday, USDA releases the monthly Crop Production and Supply and Demand reports. While concerns about production problems with U.S. crops will certainly cause traders to closely study the numbers in the reports, wider economic issues will likely have at least equal billing in the next few weeks.
