Bearish wheat data sends soybeans, corn down at midday
Wire service sources cited fund buying and short covering for the morning surge posted by live cattle futures. The WASDE report almost surely had little real impact, since the USDA made only a small revision to its 2013 forecasts. The more likely reason for the strong advance stemmed from the wholesale market, where choice cutout had jumped 2.27 cents (to 196.32 cents/pound) on the USDA midday report. Rumors anticipating the beef advance probably played a big role in the morning price spike. Bulls are probably counting upon a cash rebound from last week’s surprising drop later this week. The combination of concurrent equity index gains and U.S. dollar losses likely provided support as well. February live cattle had jumped 1.62 cents to 131.90 cents/pound, while the April contract was up 1.47 to 135.57 cents/pound.
Given the bullish leadership exhibited by the cattle market, it wouldn’t have been terribly surprising to see hog futures advancing as well. In fact, the cattle news did seem to be pulling the swine market higher despite less than supportive short-term fundamentals. The cattle gains seemingly supported the deferred swine contracts as well, although one might just as easily argue that today’s grain and soy weakness will translate into reduced feed costs and greater cattle and hog supplies by the middle of next year. The losses suffered by the nearby hog contracts probably reflect the ongoing seasonal decline in cash hog and wholesale pork values, with today’s 3.0-cent drop in ham prices very likely weighing heavily upon short-term sentiment. On the other hand, bullish traders may be looking for buying opportunities if/when the traditional December ham breakdown runs its course. February futures had inched 2 points higher to 83.95 cents/pound, while the June contract was up 0.15 cents to 98.55 cents/pound.