Ag commodities show further gains

Traders were back pushing the long side of corn on Tuesday. The December contract gained 4 1/2 cents at $7.43 1/4. The March contract added 4 3/4 cents to close at $7.47 1/4. New-crop December 2013 futures settled 4 cents higher at 6.23. Monday saw a global rush to buy commodities because progress might actually be occurring to avoid the so-called fiscal cliff in early 2013. But with many commodities retreating in price on Tuesday as new doubts emerged on economies, including a downgrade of French debt ratings, the corn market turned back to the bullish supply/demand fundamentals to spur buying.

The soybean market was higher on Tuesday as some new concerns about South American production emerged. There was market talk about how the global analytical firm Oil World this week reduced its soybean production forecasts for Argentina and Brazil by a combined 3 million tonnes. Weather outlooks do appear to be generally favorable for Brazil over the next one to two weeks. Argentine farmers face the unwelcome prospects of more rains in the central grain region that will delay plantings. At the close, January was up 18 cents at $14.12 3/4. New-crop November gained 15 cents to close at $12.91 3/4.

Wheat futures closed with slight gains Tuesday. It has become a bit of a stalemate between bullish traders noting the continued deterioration in the central and southern Plains wheat condition ratings while market bears note U.S. export sales continue to lag where they should be by now if USDA's latest wheat export forecast is to be realized. Even the recent talk about sales drying up out of Russia and the Ukraine have been of limited benefit to U.S. sales because exporters in those countries booked so aggressively in anticipation of a possible sales shut-down that sales on the books and still likely to be shipped already meet or exceed USDA's forecast exports for both countries. At the close, CBOT December was up 3 ¼ at $8.45; KCBT December was up 1 ½ at $8.77 ½ and MGE December was up 2 ½ at $9.12 ¾.

Cattle futures prices settled with modest gains on Tuesday. There was not much news to move the market higher corn prices and lower energy prices gave the cattle market a modest lift. There is no real activity in the cash cattle market with buyers and sellers still far apart. Trade volume is very light across all markets as traders prepare for the holiday. Markets will be open Wednesday and Friday, but activity is expected to be very limited. The December live cattle contract gained 45 cents and settled at $127.05. February was up 38 cents at $130.53. Feeder cattle prices were also modestly higher in very light trading Tuesday.

Hog futures posted modest gains on Tuesday. The June contract settled at $101.08, the highest level since October 11 and the second highest of the year. Futures prices gains some support from a bounce in corn prices but cash hog prices were reported to be steady to lower on Tuesday. The December contract settled at $81.65 on Tuesday and there is a good chance that the national average cash price dropped to around $72. That gap will need to close at least some over the next few weeks.