Ag markets remain under pressure early Wednesday morning

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Corn futures continued their recent decline Tuesday and again Wednesday morning. Although the global situation remains very tight, it has become very clear that elevated prices are limiting demand for U.S. product. Meanwhile, significantly improved forecasts for dry areas of Southern Brazil and Argentina are weighing upon the market, since the increased moisture could give their corn and soybean crops a big boost. March corn had fallen 6.75 cents to $6.895/bushel early Wednesday morning, while December dipped 3.5 cents to $5.595.

Soybean futures are declining in response to the latest weather news. The main weather models have diverged somewhat in forecasts for next week, but the main point of contention seems to be whether rainfall will occur early or late. The added precipitation may do little to help their corn crop, since it has probably pollinated already, but it could boost production prospects for South American soybeans substantially. March beans were trading 11.5 cents lower, at $14.0925 early Wednesday morning, while March soyoil slid 0.41 cents to 50.69 cents/pound, and March meal sank $2.8 to $407.5/ton.

Wheat futures also continued its recent decline in response to improved rainfall forecasts Wednesday morning. Those predictions center upon the U.S. Southern Plains rather than South America, but that does not change the fact that improved moisture for the domestic winter wheat crop could boost the spring-summer harvest rather dramatically. March CBOT wheat futures tumbled 7.0 cents to 7.25/bushel overnight, and March KCBT wheat dropped 5.0 cents to $7.73, while March MGE futures edged downward just 1.75 cents to $8.1425.

CME live cattle futures declined again in early Wednesday electronic activity. The market again acted rather poorly Tuesday, with early weakness apparently persuading producers to take low-ball packer bids around 123 cents/pound. That two-cent cash decline won’t encourage many bulls in Chicago. Those traders can point to the modest wholesale gains posted Tuesday afternoon and to the fact that bears could not force an April close significantly below the pivotal 130-cent area. Still, the market seems vulnerable to further short-term losses. April cattle slipped 0.25 cents to 129.70 cents/pound early Wednesday morning, while August skidded 0.27 cents lower to 125.85. Meanwhile, March feeder cattle declined 0.45 cents to 142.80 cents/pound, and August fell 0.82 cents to 156.25.

After having fallen moderately Tuesday, hog futures were mostly lower early Wednesday morning. Discounts built into nearby futures probably limited the downward pressure, as did the surprisingly large rise in pork cutout posted late Tuesday afternoon. However, the early-morning report indicating Iowa-Southern Minnesota hog weights had jumped 1.7 pounds from the week-prior reading may set a negative tone for the start of the Chicago pit session. April hogs had slipped 0.12 cents to 85.87 cents/pound in pre-dawn trading, while June lost 0.27 cents to 93.97.

Cotton futures fell sharply Tuesday after failing to advance significantly on supportive news Monday. Pragmatic traders often view such market action as signaling a market is vulnerable to a larger decline. Wire service sources argued that rising deliverable stockpiles registered with the ICE exchange played a role in the decline. Whatever the underlying cause, the drop suggests a test of major technical support around the 80 cent/pound area is looming. March cotton dove 0.90 cents to 80.81 cents/pound in overnight trading, while December plunged 1.10 cents to 82.40.

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