Weather concerns continue supporting the corn market, with traders appearing focused upon the heat wave now dominating crop growing areas in Argentina and southern Brazil. As in the U.S. hot, dry weather striking when their corn crop is pollinating could badly damage production prospects. However, bulls couldn’t sustain the upward momentum Wednesday morning, possibly due to technical considerations. That is, while the nearby March future is currently trading just above support associated with its 40 and 50 day moving averages (MAs), it has yet to break out above a trendline drawn across its August and November highs. If/when it does so, price could follow through sharply to the upside. Otherwise, a substantial setback might be forthcoming. March corn had slipped 3/4 cent to $7.27 3/4 in late-morning activity, while December edged 1/4 cent lower to $5.89 3/4 per bushel.
The South American weather situation seems to be providing underlying support for the soybean market as well, especially since so many users around the world are obviously relying upon huge Brazilian and Argentine crops to meet a large portion of their 2013 needs. And yet CBOT futures proved unable to build upon the large Tuesday advance this morning. Some might be tempted to blame light rains over the main Brazilian bean growing area, but the areas that most need moisture reportedly remain dry. We are inclined to cite profit-taking on the part of large speculators in Chicago for the price slide. March beans were trading 3 1/4 cents lower, at $14.48 1/2 per bushel late Wednesday morning, while March soyoil had declined 0.13 cents to 52.30 cents/pound and March meal dipped $1.2 to $420.4/ton.
Kansas City futures led the wheat complex higher Wednesday morning, since the industry is clearly concentrating upon the dryness dominating the hard red winter wheat fields of the Southern Plains at this juncture. Conditions in that region certainly have time to improve, but the lack of rain in most winter-spring forecasts are offering no comfort to farmers and exciting bullish futures traders. The latter were probably encouraged by the Wednesday morning price action as well, since the nearby contracts bounced from the confluence of their respective 10 and 20-day MAs. Conversely, the March CBOT contract apparently faces strong chart resistance around the $8.00/bushel level, with its 40 and 50-day MAs also presenting significant obstacles at slightly higher levels. March CBOT wheat advanced 2 1/2 cents to $7.81 3/4 in late-morning action, while March KCBT wheat had surged 5 1/4 cents to $8.36/bushel and March MGE futures climbed 2 3/4 cents to $8.67.
Given the size of its breakdown since early January, the cattle market seems overdue for a substantial rebound. Thoughts along those lines, along with hopes for improved wholesale conditions over the next week or so probably supported live cattle futures early Wednesday morning. Those hopes were at least partially dashed when the USDA released its midday wholesale report, showing beef cutout values had slipped 0.68-0.73 cents since Tuesday evening. This raised fresh concerns about the cattle/beef outlook, which in turn undercut futures once again. February cattle slipped 0.25 cents to 125.47 cents/pound in Tuesday morning action, while April fell 0.67 cents to 129.80.
Hopes for seasonal strength seemed to support CME lean hog futures early Wednesday morning, with traders very likely hoping a big cattle rebound would pull hog and pork prices upward as well. However, a mid-morning report that Russia may step up its restrictions on American beef and pork in response to its purported concerns about the hormone ractopamine in our meat sank the Chicago market soon thereafter. Russia has emerged as a significant market for our red meat exports, so a ban on those products could hurt the domestic market. That possibility almost surely caused the subsequent futures decline. February hogs slipped just 0.25 cents to 85.45 cents/pound in reaction to the news, but June futures dove 1.20 cents to 96.07.