The grain markets staged an impressive comeback Tuesday. Fund liquidation hit the commodity markets again Tuesday morning as crude oil led most products lower. However, the corn and wheat markets turned higher around midsession, with wire service reports citing bargain hunting and corn/soybean spreading for the yellow grain rebound. The concurrent bounce in the equity indexes may have offered support, whereas continued U.S. dollar strength likely hurt the bullish cause. March corn futures ended Tuesday having bounced 3.25 cents to $3.9025/bushel, while July rallied 3.0 to $4.04.
The soy complex closed mostly lower. Recent Brazilian dryness had supported the soy complex, but forecasts for late-week rains in that country got this week’s trading started on the wrong foot. Talk of Chinese economic weakness on the heels of last Friday’s cancellation of a big shipment added to the early pressure. However, the large bean result on the Export Inspections report, as well as rebounding equities, apparently limited losses. March soybean futures fell 9.75 cents to $9.82/bushel as Tuesday’s pit session ended, while March soyoil dropped 0.55 to 32.84 cents/pound, but March meal edged up $0.3 to $326.5/ton.
Renewed worries about Ukrainian conflict seemed to boost wheat prices. Although current circumstances seem quite bearish for the wheat outlook, the golden grain markets also rallied Tuesday. The comeback most likely represented a response to the resurgence of conflict in the Ukraine and its potential impact upon wheat exports from that region. One could also argue that the market had completed a technical decline late last week. March CBOT wheat advanced 4.25 cents to $5.37/bushel at Tuesday’s settlement, while March KC wheat inched up 0.75 cents to $5.7775/bushel, and March MWE wheat gained 5.0 to $5.895.
Fund selling hit cattle futures again Tuesday. Wholesale beef prices fell Monday, which probably encouraged selling today. Still, it was pretty clear that active fund liquidation was swamping the market as the day passed. Traders apparently think the greatly elevated cattle market will prove vulnerable to much larger losses in the seeming deflationary environment, despite very supportive fundamentals. February live cattle futures fell 1.40 cents to 153.05 cents/pound in late Tuesday action, while the April contract dove 1.87 cents to 151.07. January feeder cattle futures gained 0.37 cents to 214.47, but March feeders plunged 2.37 to 202.47.
Cash weakness encouraged CME hog sales as well. The cash hog markets proved rather weak Monday, and today’s early spot quotes moved even lower. CME traders rather obviously saw little reason to sponsor the long side of the hog market either, especially with worries about deflation and fund selling dominating the commodity markets. February hog futures plummeted 2.72 cents to 71.77 cents/pound at their Tuesday close, while June hogs crashed 2.98 cents to 83.67.