Grain markets prove surprisingly weak Tuesday afternoon

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Corn futures again followed soybeans higher Tuesday. The yellow grain market is deriving support from persistent supply tightness across the Corn Belt, but strength spilling over from soybeans also provided bullish power underlying corn prices. Strong export sales are rather obviously boosting crop markets in general. May corn advanced 5.75 cents to $7.09/bushel at the Tuesday afternoon close, while December climbed 2.25 cents to $5.52.

Soybean futures spiked upward in response to the latest export news from the USDA. The agency announced that exporters had sold 330,000 tonnes for 2012/13 delivery to unknown destinations and that they had sold 345,000 tonnes to China for 2013/14 delivery. This certainly suggests export customers are coming to the U.S. due to Brazilian problems getting its huge crop to ports and onto ships. However, the sizeable setback from daily highs may inspire technical and/or pragmatic selling. May soybeans had settled ‘just’ 3.5 cents higher at $14.665/bushel late Thursday, while May soyoil slipped 0.13 cents to 50.13 cents/pound, and May meal gained $2.2 to $435.9/ton.

The midsession soybean rally pulled wheat futures upward as well. Strong soybean exports clearly played a big role in the rise. We suspect confirmation that U.S. wheat represented a portion of the big weekend purchase made by Saudi Arabia also supported prices. The fact that prospects for 2013 U.S. wheat production are improving quickly as moisture levels increase probably limited the wheat gains. May CBOT wheat futures bounced 3.5 cents to $7.06/bushel by late Tuesday afternoon, while May KCBT wheat gained 6.5 cents to $7.45, and May MGE futures rose 2.25 cents to $7.9575.

Cattle futures proved unable to build upon recent gains Tuesday. Traders may simply have taken a pragmatic approach to the market, since nearby futures have not reacted very well to the big cash and wholesale price gains posted over the past week. Historically, a market that responds weakly to bullish news is often viewed as being vulnerable to a reversal. April cattle ended Tuesday having fallen 0.70 cents to 129.62 cents/pound, while August dropped 0.78 cents to 125.15. Meanwhile, April feeder cattle dove 1.12 cents to 143.60 cents/pound, while August tumbled 1.55 cents to 153.00.

Hog futures were slightly lower late Tuesday morning, then accelerated downward in the wake of the negative noon wholesale report. Concurrent live cattle losses didn’t help the situation. Despite reports indicating growing firmness at the cash level, traders apparently focused upon the weakness indicated by midday pork news. This seemingly bodes ill for short-term prospects. April hogs plunged 1.05 cents to 79.25 cents/pound Tuesday afternoon, while June slumped 1.02 cents at 89.55.

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