After performing surprisingly well Monday, corn futures accelerated upward Tuesday. There was no obvious bullish news, so wire service reports cited cash market firmness and signs of improving demand as powering the market upward. Technicians may have been buying as well, especially with the nearby March contract having pushed above chart resistance associated with the psychologically important $7.00/bushel level. March corn ended Tuesday having surged 11.5 cents to $7.05/bushel, while December gained 6.5 cents to $5.5625.
Soybean futures proved quite firm Tuesday. The market seemed set to continue its recent slide, with talk of improving Argentine weather, the progressing Brazilian harvest and concerns about potential cancelations of Chinese orders weighing upon prices. No news item obviously powered the bounce from early lows, but suggestions that tightening farmer supplies played a role gained considerable traction. Still, one has to wonder if soybean rallies can be sustained with the Brazilian harvest hitting its stride. March beans lost 3.50 cents to $14.4775 at their Tuesday afternoon close, while March soyoil remained under pressure from the palm oil market; that contract plummeted 1.11 cents to 49.02 cents/pound, whereas March meal had gained $2.1 to $427.7/ton.
Strength spilling over from the corn pit also seemed to boost the wheat markets Tuesday. Given the bearish implications of the ongoing winter storm and the moisture it is providing to large areas of the Great Plains, the wheat bounce was impressive. U.S. producer insistence upon better prices may be supporting the market, but the bounce may also have a significant technical component, with the March Chicago contract closing above the $7.00/bushel level seeming especially noteworthy. March CBOT wheat futures closed 6.5 cents higher at $7.0575/bushel Tuesday afternoon, while March KCBT wheat edged 1.25 cents upward to $7.3275, and March MGE futures advanced 3.0 cents to $7.89.
The blizzard that hit the Southern Plains Monday greatly stressed feedlot cattle in that region, which seemed to belatedly push cattle futures higher Tuesday afternoon. Poor feedlot conditions can power major winter price gains, but animals may already be adapted to the cold weather at this point. The possibility that the budget sequester will force packers to slow operations (due to the absence of Federal inspectors) may be weighing upon the market. April cattle had surged 0.87 cents to 129.30 cents/pound at the end of the CME open outcry session, while August gained 0.27 cents to 125.55. Meanwhile, March feeder cattle climbed 0.37 cents to 141.17 cents/pound, and August rose 0.25 cents to 154.40.
Lean hog futures were mixed Tuesday, with the nearby April future seeming to reflect short-term pessimism while the deferred contracts anticipated seasonal strength through spring and summer. The cash markets were mixed, whereas the ongoing blizzard seemed to disrupt the release of wholesale beef and pork information. We are guardedly optimistic about the potential for a short-term rebound, but such ideas could go out the window if the Federal government sequester forces slowdowns upon the packing industry. April hogs dipped 0.33 cents to 81.57 cents/pound at the Tuesday close, while June rose 0.27 cents to 91.32.