Wednesday morning news that domestic ethanol stocks had declined despite a moderate production increase last week may have encouraged CBOT corn traders, since that suggests industry demand for the yellow grain is improving. Pragmatic and technical considerations may also have powered the early advance. Many in the industry probably view corn futures as being oversold in the wake of recent losses, with numerous interests likely exiting positions ahead of the Friday USDA crop and supply/demand reports. Technicians may be banking upon a strong bullish reaction after the nearby March contract rebounded filled its Independence Day gap and found support around its 200-day moving average earlier this week. March corn rose 4 cents to $6.92 3/4 per bushel this morning, while December edged 1 3/4 cent higher to $5.79 1/2.

Soybean traders seemed reluctant to take on any added risk in CBOT futures Wednesday morning, especially after the Brazilian counterpart to the USDA (Conab) stated its 2012-13 soybean production forecast at a record high (although the latest figure departed only slightly from its previous prediction). The industry is apparently concerned about the likely result of the USDA reports to be released Friday. On the other hand, overnight news that Malaysian palm oil prices had rebounded from four days of losses seemingly boosted soybean oil futures, which may have supported soybeans as well. March beans had slipped 5 cents to $13.81 1/2 just before the lunch hour and March meal fell $3.7 to $407.2/ton, whereas March soyoil advanced 0.13 cents to 49.66 cents/pound.

A Wednesday morning wire service story indicating that China has recently emerged as a major buyer of U.S. and Canadian wheat seemed to boost American wheat futures in early trading. Trader ideas that December and early-January losses were overdone may have prompted fresh buying as well. We have to wonder if the morning release of an industry forecast of winter wheat plantings at 44 million pounds depressed the markets, since most private predictions had fallen well short of that figure. Conversely, the drop might simply have been triggered by the failure of nearby contracts to overcome technical resistance associated with their respective 10-day moving averages. March CBOT wheat had fallen 3 1/2 cents to $7.47/bushel by late morning, while March KCBT wheat tumbled 5 1/4 cents to $8.03 1/2 and March MGE futures dipped 3 1/4 cents to $8.42.

CME live cattle traders seem to be adjusting to ideas that the short-term outlook might not be as promising as previously thought, especially after fed cattle traded lightly at steady prices Tuesday. Given the habit of producers and packers to wait until Friday to get something done, the early-week activity was quite surprising. We suspect Wednesday morning wholesale trading is also proving less than encouraging, since bulls are almost surely relying upon sustained wholesale strength to power the whole complex higher through winter and early spring. The premiums already built into nearby futures have probably rendered them vulnerable to short-term bouts of weakness as well. February cattle tumbled 0.75 cents to 131.80 cents/pound in late morning action, while April dove 0.85 cents to 135.45.


Despite widespread expectations for a substantial seasonal rally through January and early February, both cash hog and wholesale pork values suffered moderate losses Tuesday. The cash weakness reportedly continued Wednesday morning, thereby exacerbating the surprisingly negative short-term situation. As in the cattle/beef complex, swine traders are very likely anticipating a substantial seasonal rise in wholesale prices, so Tuesday afternoon news of a sizeable drop in pork cutout may have had an inordinate impact upon CME futures. The failure of bullish efforts to support nearby values above their short-to-intermediate-term moving averages may have sparked active technical selling as well. February hogs had plunged 1.27 cents to 85.87 cents/pound just before noon, while June futures had plummeted 1.72 cents to 97.12.