Corn market moves lower at midday

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Corn futures moved lower in concert with the soybean market, as the latter continued suffering from Tuesday news of Chinese shipment cancellations. The fact that greatly elevated U.S. corn prices also seem to be strangling export demand probably rendered the yellow grain market vulnerable to spillover selling. Wire service sources cited persistent Russian corn sales and the sourcing of small international purchases from South America to reinforce negative views of the U.S. market. Recent dollar strength versus the Japanese yen can’t be helping the Chicago market situation. March corn fell had fallen 6 3/4 cents to $7.13 3/4 around mid-session, while December 2013 futures were down 2 1/2 cents to $6.20 1/2 per bushel.

Having China cancel previously contracted purchases of 300,000 tonnes of soybeans Tuesday morning obviously did a number of CBOT soybean prices yesterday. Bullish traders were hoping the breakdown would spark fresh interest from international buyers, which may explain the modest overnight bounce. However, pessimism about the strength of foreign buying seemed to come into the market this morning, since prices reversed to the downside once again. Ideas that improving South American weather will boost 2013 production in Brazil and Argentina may also have weighed upon Chicago prices. January beans had fallen 15 1/2 cents to $14.50 1/2 by late morning, while January soyoil was down 0.11 to 49.06 cents/pound and January meal dropped $6.8 to $448.1/ton.

Overnight talk that Egypt would enter the international wheat markets as a major buyer were borne out by midmorning. That nation’s wheat purchasing agency announced this morning that it had bought 180,000 tonnes of U.S. soft red winter wheat. Moreover, private exporters reported the sale of 110,000 tonnes of American hard red winter wheat to Egypt. Prices at the three Midwest exchanges surged on the news, but proved unable to sustain their upward momentum. We worry that the midmorning reversal bodes ill for the short-term technical outlook, since a drop below Tuesday’s lows might spark a large technically-driven move to the downside. March CBOT wheat was trading just 1 1/2 cents higher at $8.12 1/2 per bushel by late morning; March KCBT wheat was up just 1 1/4 cents to $8.61 3/4 and March MGE futures had inched just 3/4 cent higher to $9.02 1/4 per bushel.

After proving unable to sustain its big Monday surge Tuesday, possibly due to the sizeable drop posted by choice beef values, nearby live cattle futures underwent a fresh resurgence Wednesday morning. That buying probably marked the industry response to wire service surveys published ahead of Friday’s USDA Cattle on Feed report, which is expected to state November feedlot placements approximately 9% below the comparable 2011 rate. Forecasts for the November 1 U.S. feedlot population, at just 93.4% of one year ago, also imply a 10-year low for that figure, thereby reemphasizing the growing tightness of the domestic fed cattle supply. Conversely, having choice beef prices continually prove unable to mount a serious challenge of the $2.00/pound level raises persistent questions about the strength of beef demand at current levels. February live cattle futures advanced 0.70 cents to 133.65 cents/pound in late-morning trading, while April was up 0.37 cents to 137.50.

News of cash hog strength and spillover support from the cattle market seemed to boost CME swine values in Wednesday morning trading. One also has to wonder if news that Canadian packers will honor Russia’s request to monitor their product for the growth promotant ractopamine, supported prices as well, although that might be seen as a negative for the U.S. market, since domestic sources have not agreed to Russia’s terms. Bulls may also be thinking the snowstorm looming over Iowa and surrounding areas will disrupt transportation and at least partially support prices over the short run. February hogs surged 0.85 cents higher to 86.12 cents/pound this morning, while its June counterpart rose .20 cents to 100.25.


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