Markets Out Of Synch; Dollar, Commodities Up Together

Markets are out of synch this morning.  The US Dollar is up while agricultural commodities also climb, and stock market futures are up despite losses in Europe and disappointing economic data from China.\r\n   Equities traders hope for more government stimulus in China, and the buying interest may be ignoring rising tensions along the Russia/Ukrainian border with unrest in Moldova thrown in.\r\n   There may be ideas among traders that tensions over Crimea won’t get much worse, but NATO’s top military commander warned Sunday that Russia had amassed enough forces on Ukraine’s border to reach Moldovia’s Trans-Dniester region, which lies on the other side of Ukraine.\r\n   Markit’s HSBC Flash China Manufacturing PMI fell at the quickest pace in 18 months during March to an 18-month low of 48.1 from 48.5 in February, with the Flash Manufacturing Output Index at 47.3 from 48.8 in February, also an 18-month low.  Both are below the 50 line that separates growth from contraction and were said to be below trade expectations. \r\n   And rain has fallen in eastern Australia ahead of winter wheat planting, easing concerns about dry soils even as Nino builds in the Pacific Ocean and threatens drought.\r\n\r\nWEATHER CONCERNS BUOY CHICAGO FUTURES\r\n\r\n   But a rising El Nino holds hope for favorable weather conditions in the US Midwest and should be bearish to prices, as should reports that the first load of Brazilian soybeans is on its way to the US.\r\n   Yet prices are up in overnight trading amid continued cold temperatures and a late spring causing worries that US crops could run into withering summer temperatures.  The latest forecasts also are drier in the southern Midwest than previously.\r\n   As the Central and Southern Plains continue to dry out, traders are concerned about the condition of the Hard Red Winter wheat.\r\n\r\nCORN HELPED BY EXPORT IDEAS, FEED USE\r\n\r\n   Corn futures are being supported further by ideas of strong demand for US loadings after Egypt bought on Friday and by Friday’s monthly Cattle-On-Feed report.  The USDA showed a 15% increase in feedlot placements over the same month a year ago, eclipsing even the most aggressive of pre-report estimates.\r\n   That could be bearish for June and August futures contracts on the opening as traders expect the February placements to be ready for slaughter during that period.\r\n   Marketings for slaughter during the month were 3% below a year ago and were the lowest for a February since the data series began in 1996.  However, this should already be in the market since the number was almost spot on pre-release estimates.\r\n\r\nMONEY FLOW OUT OF CATTLE MAY CONTINUE\r\n\r\n   On-Feed report pressure could exacerbate the flow of money out of live cattle futures, and speculative traders could take the cue and continue selling after the April contract closed below key moving-average support on Friday.\r\n   And beef cut-out values are showing a reluctance to move much higher, even though cash cattle prices were strong last week at mostly $150 to $152 on a live basis.\r\n   The USDA reported choice boxed-beef Friday at $240.16 per cwt, down $1.41 and select at $233.66, off $1.11.  The choice/select spread narrowed to $6.50, and the number of fabricated loads sold into the spot market was only \r\n   Weekly slaughter was above a week ago at 575,000 head versus 564,000 the previous week but below last year’s 604,000.\r\n   The CME Feeder Cattle Index for the seven days ended Thursday was $173.93, down $0.09 while the March futures contract closed Friday at $175.02, up $1.40.\r\n\r\nOVER THE FENCE\r\n\r\n–PEDv continues to rattle red meat industry\r\n–NAMA votes to merge with AMI – AMI to vote in April\r\n–Rising fear that more economic sanctions against Russia could hamper trade\r\n–Fed speeches this week could clarify Yellen talk about higher interest rates\r\n–Worries grow over spring flooding potential as upper-Midwest snow melts\r\n