Exportable Commodities See Pressure From Firm Dollar

Exportable commodities are seeing a little pressure in overnight trading as the US Dollar rose against other currencies on the premise that economic data coming next week could be bullish for the greenback.  A higher Dollar could price some importing countries out of the market by making US goods more expensive relative to their currencies.\r\n   Some traders expect US non-farm payroll data next Friday, April 4, to show enough job growth to warrant a continued tapering of the Federal Reserve’s economic stimulus program.  \r\n   The Bank Of Japan is to release its quarterly Tankan Business Sentiment Survey Tuesday, and with Japan’s sales tax increase starting the same day, traders expect the survey will show a decline in business attitudes, which also would support the US Dollar.\r\n\r\nUKRAINE SECURES BAILOUT LOANS\r\n\r\n   Meanwhile, Nikolay Gueorguiev, the International Monetary Fund’s Mission Chief, today announced a bailout loan package of up to $27 billion over the next two years, $14 to $18 billion of which is to come from the IMF.  International funds cover the rest.\r\n   There are strings, however.  The IMF will be able to impose reforms to bring the country back to financial stability, which is never pleasant for a virtually bankrupt country, and which could weaken the local currency even more and send investors to a safer haven like the US Dollar.\r\n   \r\nRISING COMMODITIES BRING INVESTOR MONEY\r\n\r\n   But even though the US Dollar Index is up overnight, the overall trend is less certain, and fund activity continues to pump money into commodities as the funds bet on further gains in agricultural commodities.\r\n   A chart of daily moves by the Dollar Index shows inside trading days, a session where the high and low both fall within the trading range of the previous day, for the last two sessions.  These show a lack of conviction by traders and come after a sharp jump at midweek last week.\r\n   Commodity fund holdings of agricultural commodities are important because CFTC reports show them holding near-record net long positions heading into Monday’s USDA Quarterly Stocks and Prospective Plantings reports.  \r\n   It’s evident those investors expect either the reports or the weather to be bullish to grains and soybeans, even though many commodity analysts hold bearish longer-term views of corn, wheat and soybeans.\r\n\r\nWEATHER ADDING PRESSURE TO GRAINS\r\n\r\n   Grains and soybeans are seeing added pressure this morning from some unexpected showers in the southern plains Wednesday.  It isn’t enough to ease the drought much, but unexpected rain still is bearish to market psychology.\r\n   Soil temperatures in much of the Midwest still are too cold for planting, but rain and a gradual warm-up into April is expected to help planting efforts.\r\n\r\nCASH CATTLE REMAIN FIRM\r\n\r\n   Cash cattle markets remain firm with further trading Wednesday at prices that were steady to $2 per cwt higher than last week at $150 to $152 on a live basis and up to $154 in Nebraska.\r\n   Beef markets are mixed with the USDA reporting choice boxed-beef Wednesday at $241.76 per cwt, up $0.51 and select down $1.14 at $233.31.  The choice/select spread widened to $8.46, and the number of fabricated loads sold into the spot market was 102.\r\n   Week-to-date slaughter was steady with last week at 351,000 head and above last year’s 344,000, showing good demand for fed cattle.\r\n   The CME Feeder Cattle Index for the seven days ended Tuesday was $177.18, up $0.16 while the March futures contract settled Wednesday at $177.95, up $0.72.\r\n\r\nIN OUR OPINION\r\n\r\n–Cattle slaughter is up as packers rush to meet obligations for planned early April beef features\r\n–Cold soil temperatures still point to late planting – could mean some corn acres are switched to soybeans.\r\n–Southern Plains rain chances still short of drought needs\r\n–Retail grocers may be planning early April beef features – hoping for warmer temperatures.\r\n