Corn prices settled higher Wednesday. Futures rallied midday as concerns over the dryness in South America triggered more buying. Weather forecasts and reports coming in show dry conditions are quite severe and expected to continue in both Argentina and parts of Brazil, which has rallied the corn futures market the last several days and will keep prices strong. The nearby contract blew through the resistance at $6.26 and has challenged the next technical resistance at $6.43, but did not hold onto levels above that.  The lower stock market is weighing on corn. March was 9 1/4 cents higher at $6.42 1/2 and May was 9 cents higher at $6.50 1/4.

Soybean futures ended slightly lower Wednesday. The market recovered some of its losses and managed to even trade higher before closing just below unchanged. Prices were pressured this morning by profit-taking from Tuesday’s rally, but concerns over the dryness in South America sparked more buying. In the meantime, soybeans were also under spillover pressure from the stronger dollar and the pullback in the stock market. January was 1 1/2 cents lower at $11.98 1/4 and March was 1 1/2 cents lower at $12.08.

Wheat futures closed higher Wednesday. Short-covering lifted prices on Wednesday despite the stronger dollar and weakness in the stock market. Wheat has rallied to a 7-week high, moving above its 100-day moving average, which is positive technically. However, there is little new fundamental news, and the recent strength is merely on short-covering rather than improving fundamentals. Wheat is also keeping a close eye on corn as more wheat has been priced into feed rations. 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.  CBOT March was 6 1/2 cents higher at $6.51 1/4, KCBT March was 3 1/2 cents higher at $6.99 1/4 and MGE March was 1/2 of a cent higher at $8.63.

Live cattle futures settled mixed Wednesday. Nearby prices were pressured by profit-taking following last week’s rally. Beef prices remain strong, and traders are concerned that this, coupled with the seasonal slowdown in consumption, will weigh on demand. Adding pressure are the light mid-holiday demand and the shortened work week ahead of the New Year. 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. February was 5 cents lower at $123.15 while April was 30 cents higher at $126.85.

Lean hog futures closed mostly higher Wednesday. Traders are hopeful that pork demand will rebound, despite the usual post-holiday lull for this time of year and the strong prices. Hog prices usually improve from their December lows all the way into spring. Adding support was a smaller-than-expected increase in the hog supply forecasts for 2012 in last week’s Quarterly Hogs and Pigs report. 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. February was 20 cents lower at $85.55 while April was 20 cents higher at $88.95.