Ag diverged Wednesday afternoon

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Corn futures posted a strong close Wednesday. Talk of strong demand seemingly offered background support for corn futures today, but traders also pointed to strength spilling over from the wheat markets and short-covering for the late gains in yellow grain prices. March corn climbed 4.25 cents to $4.5375/bushel in late Wednesday trading, while May ran up 4.75 at $4.6025.

Chinese news probably sank the soy complex. Talk of South American production problems reemphasized the tightness of the US soybean situation to start this week, with futures building upon Tuesday’s big gains overnight. However, the market was hit with news that Chinese inspectors had found US soybean shipments contaminated with corn containing the unapproved MIR162 gene. The prospect of reduced or refused soybean shipments into China very likely sparked the subsequent CBOT reversal. March soybeans fell 6.75 cents to $13.5425/bushel Wednesday afternoon, while March soyoil sank 0.12 cents to 40.24 cents/pound, and March soymeal tumbled $3.9 to $453.0/ton.

Weather concerns continue supporting the wheat markets. Traders continue talking about the relative tightness of the U.S. wheat situation and about the potential impact of wintry conditions and Canadian transport problems. The prospect of another arctic blast over the Midwest next week seemed particularly pertinent today. March CBOT wheat futures surged 8.25 cents at $6.2025/bushel at their Wednesday settlement, while March KCBT wheat futures added 6.75 cents to $6.9275, and March MWE futures rose 4.75 to $6.84.

Cattle futures reversed from February highs Wednesday afternoon. Cattle futures rallied strongly Tuesday in response to strong beef gains posted early this week. Prices surged to a fresh February high by midmorning, but accelerated lower after bulls proved unable to sustain the move. The weak close seemingly implies more of the same later this week. April cattle futures closed 0.30 cents lower at 141.57 cents/pound Wednesday, while August lost 0.47 to 131.52. Meanwhile, March feeder cattle declined 0.50 cents to 171.17 cents/pound, and May dove 0.67 to 173.07.

Talk of tightening supplies supported deferred hog futures. Recent CME gains show hog traders expect tightening hog and pork supplies during the coming weeks. The situation could be extremely tight during spring and summer, which is probably why those contracts outperformed the nearby April future this morning. The latter likely suffered from its sizeable premium to cash prices. April hogs settled down 0.17 cents at 97.20 cents/pound Wednesday afternoon, while June rallied 0.17 to 107.50.

Cotton traders seemed to take their cue from the soybean market Wednesday. The ICE cotton market again lacked for substantive news today. Futures seemingly dipped in concert with equity index futures overnight, but failed to rebound with stocks around midmorning. Instead, the bearish soybean reversal seemed to spark concurrent cotton losses. Nearby futures’ inability to break out above technical resistance probably spurred long-liquidation. March cotton plunged 0.94 cents to 86.97 cents/pound at their Wednesday closing, while July cotton tanked by 1.17 cents to 87.83.


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