Grain Markets Hit the Dirt

American food producers were hit hard this week as nearly all agricultural commodity markets declined. Positive growing weather across the Midwest, low levels of speculative buying, and a stronger U.S. Dollar all weighed on the futures markets. On the week, May corn crashed nearly 20 cents per bushel (-5%), soybeans slid 10 cents/bu (-1%) and wheat worked 15 cents lower (-3%). As grain prices continue eroding, many farmers are worried that their profit margins may be threatened this year.

Some market bulls were concerned by news that corn and soybean acreage would likely increase over last year's figures, which weighed on prices as traders considered the prospect of another record crop year. Although there are still some lingering transportation problems in Argentina and Brazil, many traders are worried that the South American nations' record soybean crops will drag prices lower once they hit the global market.

Livestock Stumble Lower

The livestock markets began this week with a surge, as the June live cattle contract and June lean hog contracts climbed to all-time highs on Monday at 96.3 cents per pound and 83.5 cents/lb, respectively. Yet the markets were not able to hold onto these gains, falling hard as the week wore on.

The livestock markets lost ground as the grains dropped and U.S. Dollar gained strength, two factors that caused speculators to take their recent profits in the livestock markets. By Friday afternoon, June cattle had fallen to 92.4 cents/lb (-4%) and June hogs had dropped to 79.2 cents/lb (-5%). Despite the negative action this week, producers may find some hope in the quarterly Hogs & Pigs Report, which will be released by the USDA after the markets close on Friday afternoon.

Energies Continue Slump

High supplies in the energy markets and warm weather continued to dampen demand for crude oil and natural gas this week. Crude oil prices dropped $1 this week to $80/barrel (-1%) while natural gas continued to grind lower, with the April contract making a new low at $3.94 per million British thermal units (-6%). With the heating season over, many analysts expect energy prices to continue to work lower, although Spring Break travel may give the gasoline market a demand boost in the coming weeks.