Commodity, Stock Markets Unsettled By Economic Jitters

Commodity and stock markets are unsettled this morning amid fears the Chinese economy is softening and nagging thoughts Ukraine’s grain production this year could be trimmed by political unrest.\r\n   Corn, which regained some of its recent losses on Tuesday, is losing ground in overnight trading, CBOT wheat is narrowly mixed but mostly lower, soybeans are down sharply.\r\n   But a warning sign for many is the steep decline in copper futures the last two days.  Copper lost favor with traders on Tuesday and is now down to its lowest levels since July 2009.\r\n   To many traders, copper is seen as a canary for the economy since its demand comes largely from housing projects in the form of pipes and wiring.  But it’s also used in China as a financing tool and so becomes even more sensitive to that country’s welfare.\r\n   Recent declines in the Purchasing Manager’s Index for China have caused worry about continued economic growth, and further news reports of contracting inflation are being cited this morning for the weakness.\r\n   The softening economic outlooks are spilling over into the soybean markets, which also are dealing with reports that China has cancelled more than 500,000 tonnes of Brazilian orders as local crush margins collapse.  Rumors that Chinese buyers desire even more cancellations are plaguing the markets.\r\n   Chinese soybean futures have declined 3% to 4% over the last month while US markets have advanced, and the spread may have become too much for many.  US stocks are tight, but falling demand from China has speculators taking profits and heading for the sidelines.\r\n   Corn futures are down overnight, drug lower by falling soybeans in spite of nervousness about Ukraine’s production.  The market was supported Tuesday by speculation of a potential acreage loss.  \r\n   Ukraine corn and wheat exports have not been affected by the political strife, but there are worries that fertilizer shipments and other factors could trim planting and fieldwork.  Some think political tensions could block planting in Crimea, and while Crimea is considered only a minor grain-producing region of Ukraine, such rumors lead to concerns about other portions of the country.\r\n   A referendum is scheduled for Sunday to determine whether the people of Crimea want to secede from Ukraine and become part of Russia.  US and EU officials have said any secession would be illegal under international law, but such talk apparently is falling on deaf ears, because the vote is still scheduled, so the market uncertainty likely will continue to build.\r\n   US grain markets also are seeing pressure from weather reports that an El Nino event is brewing in the Equatorial Pacific.  Such warm-water events bring greater ocean evaporation and more rain to the US.  That would be good news to farmers in California, Southwestern states and the Central and Southern Plains where a lack of rain has many in a state of drought, as the National Weather Service drought monitor shows. <a href=\”\”>Your text to link…</a>\r\n   No fed cattle trading was reported in the Plains feedlots Tuesday.  Futures markets struggled against long profit taking despite higher wholesale beef prices, which may have kept cash trading interest at bay.\r\n   Beef markets continue to lend support as prices set record highs, but worries are growing that consumers will recoil.  If there is evidence of consumer backlash, then beef and cattle prices could drop sharply, but for now, the markets remain firm. \r\n   No bids were reported Tuesday from packer buyers, but asking prices were up about $2 per cwt from last week at $151 to $152 on a live basis and about $243 to $245 on a dressed basis. \r\n   Slaughter is falling behind last week and last year, with USDA estimated week-to-date kills at 219,000 head, compared with 228,000 last week and 237,000 last year.\r\n   The USDA reported choice boxed-beef Tuesday at $241.47 per cwt, up $2.57 and select at $237.71, up $1.72.  The choice/select spread widened to $3.76, but the number of fabricated loads sold into the spot market was only 78.\r\n   Feeder cattle were mixed Tuesday, but March made a new contract high.  They are generally higher in overnight trade as corn weakens.\r\n   The CME Feeder Cattle Index for the seven days ended Monday was $173.56, up $0.22 while the March futures contract closed Tuesday at $173.92, up $0.22.\r\n