Corn prices are expected to open 3 cents to 5 cents higher on Wednesday. Corn prices soared on Tuesday following the long weekend as the dry situation in South America worsened. Nearby corn contracts ended the day up about 13 cents. Price gains in overnight trade were much more modest, about 3 cents to 4 cents higher. The nearby contract blew through the resistance at $6.26 and may now challenge the next technical resistance at $6.43. Weather forecasts show dry weather continuing in Argentina and parts of Brazil, which should provide support to the corn futures market.
Soybean futures are expected to open 6 to 8 cents lower on Wednesday. With corn futures drawing support from the dryness in South America, the decline in overnight soybean trade is a bit surprising. The weakness is blamed on technical factors. While there is concern about the soybean crops in the Southern Hemisphere, the problems have not had much of an impact on actual demand for U.S. soybeans. Soybean futures prices are considered to be oversold, but prices will probably rebound if weather conditions in Brazil and Argentina don’t improve soon.
Chicago wheat prices are expected to open 3 cents to 5 cents higher. The weakness in the value of the U.S. dollar is helping to support wheat prices and chart patterns are generally supportive. But there is little new fundamental news to move the market. Overnight prices traded about 5 cents to 6 cents higher at all three markets. In general, weather conditions are relatively good for 2012 wheat production with increasing snow cover in Ukraine. Longer term wheat prices will fall if it looks like we are headed for big crops in key wheat producing countries, but for right now the price trend is up.
Live cattle futures prices are called mixed for the open on Wednesday. Live cattle futures posted some pretty big declines on Tuesday with nearby contracts down by more than $1 per cwt. Showlists for this week indicate more cattle are available to the cash market which may tend to temper any significant increase in cash prices, but some buyers have low inventories, especially in the South where trade volume last week was very low. However, no significant cash trade activity is expected before Thursday. The big gains in cattle futures prices last week is being attributed to short covering
Lean hog futures are expected to open 30 to 50 points higher on Wednesday. Hog futures prices closed mostly lower on Tuesday, but there were encouraging signs from the cash market. Cash hog prices were up by more than $1 per cwt in the Western Corn Belt. Hog prices usually improve from their December lows all the way into spring. Plants will be closed Monday reducing the number of hogs needed for next week, but a large slaughter is expected for Saturday, Prices dropped on December 8 leaving a gap of about 50 cents from $97.50 to $98 for the June contract. There is a good chance prices will move up to fill that gap over the next few sessions.
Cotton prices are expected to open 150 to 175 points higher on Wednesday. Cotton prices posted bug gains in overnight trade with the July contract up 1.85 cents per pound a one point. Cotton prices have been moving higher over the past two weeks, but the jump in overnight trade may indicate some new developments in market fundamentals. China has recently stepped up imports to rebuild reserves. The strength in the grain markets provided some spillover support to the cotton market on Tuesday.