Grains start week mixed. Monday, August 5, 2024

December corn is currently up 1¼¢.

November soybeans are down 1¼¢.

September wheat contracts are also in the red. CBOT wheat is down 5½¢. KC wheat is down 1¾¢. Minneapolis wheat is down 3¼¢.

“Grain and soybean futures are in the red at the end of early trade with wheat futures leading the way lower under pressure from economic worries spurred by further sharp losses in U.S. stock index futures and further weakness in crude oil futures,” said The Brock Report this morning near the end of the overnight session. “Strong U.S. crop prospects remain a negative market factor. Futures losses have been limited by a weaker dollar.”

In his commentary this morning during the break between the overnight session and the 8:30 a.m. open, Arlan Suderman, chief commodities economist at StoneX, put commodity futures into a larger economic context. “Perception is reality in the markets, and perception has changed. And it should be noted that it didn’t take much to change perceptions from one day to the next.

“The Federal Reserve gave the markets what it wanted — the closest thing to a promise that it could expect that we’ll see rate cuts starting in September, and possibly multiples of them. The jobs report on Friday by itself wasn’t that bad, but it reflected momentum toward a softening jobs market. The unemployment rate is still at 4.3%, which is a historically low number. The economy still created 114,000 jobs in July, which is low, but not anything we haven’t seen before. But suddenly traders got nervous with stocks trading just below record highs, and they started to panic.

“…Commodity traders are also shedding risk exposure today, largely moving money to the sideline, or simply riding their short positions lower. Expectations of a recession — perhaps global — means less demand for commodities. At least that will be the perception as long as fear remains high. The energy sector is one place where we tend to see that play out the most. People engage in less discretionary travel when they’re worried about the economy, consuming less energy as a result. The same mindset tends to drive price action across much of the commodity sector, including the grain and oilseeds. The good news is that cheap prices tend to create demand, but not before we see consumer confidence restored.”

This morning September S&P 500 futures are down 164 points and September Dow futures are down 950 points. September crude oil is down 94¢. The U.S. Dollar Index September contract is down to 102.31.

October live cattle, September feeder cattle, and October lean hogs are all in the red this morning, down $3.45, $5.95, and $1.98, respectively.

Tags: futures, live cattle, feeder cattle, lean hogs, corn, soybeans, wheat