Ag markets diverged significantly Friday morning

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The corn market gave back a large portion of its Thursday rally Friday morning. Wire service reports cited profit-taking by bulls, but technicians were probably selling in response to the nearby contracts’ failure to top short-term moving average resistance yesterday. September corn dove 12.75 cents to $4.6875/bushel around midsession Friday, while December dropped 11.0 cents to $4.6125.

After dropping in overnight action, the soy complex rebounded Friday morning. Slight improvements in Corn Belt weather forecasts and profit-taking probably hit the soybean market in early morning action. The technical situation also seems rather dicey. However, a fresh burst of strength in the vegetable oils apparently gave the whole complex a boost. September soybeans climbed 4.0 cents to $12.9225/bushel late Friday morning, while November beans edged up 0.5 to $12.66. September soyoil surged 0.27 cents to 43.39 cents/pound, and September soymeal inched $0.3 higher to $410.1/ton.

As has become rather routine lately, wheat futures followed corn lower this morning. Wire services cited the yellow grain’s malign influence and profit-taking for the drop. However, chart resistance seemed to be a major issue for the wheat markets, so the sizeable early losses were not terribly surprising. September CBOT wheat sank 8.5 cents to $6.29/bushel in Friday morning trading, while September KCBT wheat declined 5.0 cents to $6.98, and September MGE futures lost 3.0 cents to $7.365.

Cattle futures turned lower despite supportive Friday news. Cattle futures firmed in response to wholesale strength Thursday and again in overnight action, since packers might pay more for cattle in those conditions. And yet, futures turned decidedly lower around midmorning and remained depressed despite news that Merck is suspending sales of its Zilmax growth enhancer. Traders may be expecting flat to lower cash prices later today. October cattle futures dipped 0.30 cents to 127.80 cents/pound around lunchtime Friday, while December slid 0.10 cents to 129.80. September feeder cattle bounced 0.07 cents to 157.15 cents/pound, but November sank 0.42 cents to 159.60.

Lean hog futures also declined Friday morning. Although cash and wholesale markets have proven stunningly strong lately, traders have apparently become concerned about the downside potential for the complex, since production routinely surges from midsummer through fall and pork demand diminishes after Labor Day. Today’s losses probably reflect those worries. October hog futures sagged 0.32 cents to 86.97 cents/pound in late Friday morning action, while December skidded 0.40 cents to 83.62.

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