Livestock futures diverged from tumbling crop markets Wednesday

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Talk of South American rainfall apparently sparked Wednesday’s corn breakdown. Forecasts for widespread rainfall over fields in Brazil and Argentina could substantially help their crops and boost production; that news apparently sparked selling in CBOT corn, which later accelerated as nearby futures hit fresh seasonal lows. March corn futures closed down 9.0 cents at $4.17/bushel Wednesday afternoon, while May tumbled 8.5 at $4.2525/bushel.

Prospects for large South American crops also depressed the soy complex. As in the corn pit, the potential for late-week rainfall over needy Brazilian and Argentine acres could substantially boost their forthcoming crops, with the resulting supply surge holding bearish implications for the price outlook. In addition, a quarterly report from Monsanto implied an increase in U.S. production later this year, thereby exaggerating losses in deferred futures. March soybeans dropped 6.75 cents to $12.6925/bushel at their Wednesday settlement, while March soyoil sank 0.25 cents to 37.68 cents/pound, and March soymeal lost $3.3 to $412.5/ton.

Wheat markets turned sharply lower as well Wednesday. Talk of frost damage to U.S. wheat fields is dwindled today, which partially explains early wheat slippage. Pessimism about export prospects reportedly added downward pressure. Traders were probably reacting to concurrent losses in the corn and bean markets as well. Conversely, surprising strength in spot values supported the Minneapolis market. March CBOT wheat futures dove 13.75 cents to $5.8875/bushel late Wednesday afternoon, while March KCBT wheat futures fell 8.25 cents to $6.37, but March MWE futures dipped just 3.75 to $6.27.

Rising beef prices again supported cattle futures. Rising cash and wholesale prices played a big role in the recent advance, with Tuesday’s CME dip being an exception. Thus, today’s resurgence wasn’t terribly surprising, especially after beef cutout values rose strongly again at midday. February cattle futures closed unchanged at 136.52 cents/pound Wednesday, but April futures surged 0.62 to 136.97. Meanwhile, March feeder cattle futures advanced 0.72 cents to 168.55 cents/pound, and May ran up 0.30 to 169.67.

CME hogs followed cattle higher Wednesday. Hog traders are expecting a sizeable seasonal advance in cash and wholesale prices over the next six weeks. Although the midday report indicated pork cutout had given back a big portion of Tuesday’s surge, hog futures closed strongly. Technical buying and strength spilling over from the cattle pit probably supported prices. February hogs settled up 0.05 cents at 85.57 cents/pound Wednesday, while June climbed 0.42 to 101.05.

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