Grain markets posted very mixed showings Tuesday

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Corn futures followed the soybean market higher early Tuesday morning, but reversed sharply in the wake of the weekly Export Inspections report from the USDA. The news that the latest weekly total reached just 9.5 million bushels apparently disappointed CBOT traders, since the nearby contracts turned lower from that point. Other sources cited the improved precipitation outlook for the Great Plains; the expected snow may improve the moisture situation ahead of spring planting. March corn settled 3.5 cents to $6.9525/bushel Tuesday afternoon, while December tumbled 5.25 cents to $5.57.

Soybean futures spiked upward in reaction to several bullish developments Tuesday. Weekend rainfall over dry Argentine fields proved rather sparse and short-term forecasts are little better. The weekly Export Inspections report was also supportive, because the 40.4 million bushel result topped expectations in the 29-35 million bushel range. Bulls could point to the latest Chinese news as well, since the early report indicated they had recently bought 120,000 tonnes of soybeans from the 2012-13 U.S. crop; that suggests short-term demand is very strong. March beans leapt 45.75 cents to $14.7025 by the time the closing bell rang Tuesday, while March soyoil jumped 0.86 cents to 52.53 cents/pound, and March meal surged $15.9 to $425.3/ton.

Wheat futures declined Tuesday despite a supportive result on the weekly USDA Export Inspections report. Traders were reportedly expecting a weekly total in the 15-20 million bushel range, while the actual result came in just over 30 million. Traders seemingly found little backing for an upward surge and sold aggressively soon thereafter. On the other hand, the market may simply have reacted to forecasts for strong precipitation over the Winter Wheat Belt later this week and again next Monday-Tuesday. Whatever the cause, the breakdown may bode ill for the short-term wheat outlook. March CBOT wheat futures dove 10.0 cents to $7.3225/bushel at the Tuesday close, while March KCBT wheat dropped 6.50 cents to $7.69, and March MGE futures fell 6.0 cents to $8.14.

Cattle futures proved unable to build upon their rally from late last week on Tuesday. That was rather surprising, especially after the USDA reported beef cutout values had risen rather sharply at midday. Wire service sources cited cattle industry concerns about the short-term cash and/or wholesale outlook. The cattle/beef complex has historically tended to be weaker in the second half of most months than earlier, but that is not always the case. April cattle sank 0.90 cents to 129.55 cents/pound at its Tuesday settlement, while August declined 0.12 cents to 126.60. Meanwhile, March feeder cattle dropped 0.32 cents to 143.17 cents/pound, and August fell 0.48 cents to 156.42.

Hog futures also proved quite weak to start the holiday-shortened week. We suspect general anticipation of a seasonal weakness through late February and March played a role in the drop, but traders may also have been reacting to talk that China was set to follow in Russian footsteps in insisting upon independent testing of U.S. pork for the growth promotant ractopamine. Unlike Russia, China is a sizeable player in the U.S. pork export market. April hogs closed 1.20 cents lower, at 83.05 cents/pound Tuesday, while June dove 0.97 cents to 91.97.


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