After surging to a five-week high in early morning trading, corn futures suffered a sharp reversal when the CBOT pit session commenced. The reversal was ostensibly caused by the weekly Energy Information Administration report, which stated the ethanol produced last week at its lowest level in 2 1/2 years. Having such a sign of diminished domestic demand come atop the poor results of recent export sales data suggests the market is simply too high at current levels. Given the overbought nature of the short-term technical situation, it was not very surprising to see corn futures drop sharply in response. March corn had fallen 4 cents to $7.26 1/2 just before lunch, while December was unchanged at $5.89 1/4 per bushel.

In contrast to the corn reversal, soybean futures proved able to sustain a sizeable portion of their early gains into the noon hour. Talk of increasing dryness in Argentina, where shallow-rooted plants might prove especially vulnerable to a heat wave, apparently provided continuing support. The overnight advance had pushed the nearby contracts back above their respective 40 and 50-day moving averages (MAs), but the late-morning slippage put back below those pivotal support/resistance levels. A daily close at lower levels might bode ill for the short-term technical outlook. March beans were trading 13 1/4 cents higher at $14.26 3/4 by late morning, while March soyoil had risen 0.21 cents to 51.08 cents/pound and whereas March meal had gained $4.4 to $416.3/ton.

Wheat futures had seemingly been boosted early this week by talk of frigid temperatures dominating the Great Plains early next week. However, industry sources downgraded the potential importance of that news Wednesday morning, claiming the forecast temperatures would not be cold enough to seriously damage the hard red winter wheat crop. Talk along those lines, as well as the reversal suffered by the corn market seemed to spark widespread selling of wheat futures as well. March CBOT wheat had slipped 3 1/4 cents to $7.79 1/2 around mid-session, while March KCBT wheat had fallen 2 1/4 cents to $8.36/bushel and March MGE futures edged 1/4 cent lower to $8.66.

Nearby live cattle futures seemed perfectly positioned to rebound strongly from recent losses Tuesday and again early this morning, but proved unable to repeat their 2011-12 pattern of rebounding strongly from short-term setbacks. That weakness apparently persuaded Southern Plains producers to take packer bids around 125 cents/pound. While the Nebraska market stabilized around that levels last week, this represents a drop of about 1.75 cents from the corresponding Panhandle average. And while cutout values rose moderately Wednesday morning, that clearly did little to support CME cattle prices in the face of the cash weakness. February cattle fell 1.17 cents to 129.25 during the early portion of the Chicago session, while April tumbled 1.10 cents to 134.75.

Hog futures proved surprisingly firm in the face of the Wednesday morning drop by their counterparts in the cattle pit. Differences in their respective cash situations probably account for the difference. That is, while wire services were reporting significant declines in Southern Plains cattle prices, they also published USDA reports of higher morning prices at direct markets west of the Mississippi River. The noon pork report also seemed supportive. Still, one had to wonder if the hog and pork complex can perform at all well if cattle and beef prices suffer an unexpected failure during the days and weeks just ahead. February hogs had inched 0.10 cents higher to 85.35 cents/pound just before lunch, while June futures rose 0.17 cents to 96.77.