Hogs diverged from general advance in other ag markets Tuesday

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Optimism about Wednesday’s WASDE result seemed to boost the crop markets Tuesday. Chinese officials announced Monday night that they had approved Brazilian corn for import, so the implied increase in competition for U.S. corn weighed on CBOT prices. However, prices rebounded as the day passed, seemingly reflecting traders suspicions that the USDA WASDE report will indicate strong demand and tightening supplies for U.S. grain and soy products. May corn bounced 7.75 cents to $5.07/bushel at Tuesday’s settlement, while December climbed 7.5 to $5.13.

WASDE expectations also seemed to spur soy buying. News that South American beans have begun arriving at U.S. ports depressed soybean prices to start the week, but, as in the corn pit, soy values rebounded today. Again, wire service sources cited bullish ideas about the results of the forthcoming WASDE report for the surprising CBOT advance. May soybeans jumped 18.25 cents to $14.825/bushel at Tuesday’s close, while May soyoil surged 0.68 cents to 42.11 cents/pound, and May soymeal gained $3.8 to $478.1/ton.

Midday weather forecasts may have sparked Tuesday’s wheat rebound. Monday’s weekly state reports on winter wheat conditions showed continued deterioration in the southern Plains, but the weak market reaction suggests traders expected crop conditions to be even worse. On the other hand, meteorologists interpreted midday runs of the weather forecasts as indicating reduced precipitation for the Southern Plains in mid-April, which probably sparked late gains. May CBOT wheat futures rallied 4.75 cents to $6.81/bushel in late Tuesday action, while May KCBT wheat futures rose 2.0 cents to $7.415, and May MWE futures added 1.0 cent to $7.2325.

Wholesale strength apparently supported cattle futures. CME cattle futures rose moderately Tuesday, which may have partially reflected the sizeable discount to cash values already built into the various contracts. In addition, grocers seemingly stepped up their buying for early-May beef features, with the resulting wholesale price increase supporting CME prices. June cattle futures rallied 0.35 cents to 135.27 cents/pound at their Tuesday close, while December surged 0.90 to 140.55. Meanwhile, May feeder cattle edged up 0.02 cents to 178.87 cents/pound, and August rose 0.07 to 180.57.

Bearish expectations seemed to dominate the hog market Tuesday. Although wholesale quotes rose modestly this morning, CME hog traders were not encouraged. They apparently believe the February-March price spike reflected supply reductions unlikely to continue this summer. Moreover, the soaring prices could substantially reduce demand before grilling season even arrives. June hog futures plunged 2.62 cents to 118.75 cents/pound as Tuesday’s pit session ended, while December dove 1.80 to 88.85.

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