Commodity traders seem reluctant to push the markets Tuesday

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South Korean buyers bought corn heavily over the weekend, although only a modest portion of those purchases will apparently come from the U.S. Private Israeli procurement agents also issued international tenders for 135,000 tonnes of corn Tuesday morning. And while American sources may be shut out of that transaction, this news does suggest business is picking up in the wake of the year-end holiday season. Indeed, one has to wonder if yellow grain prices would have responded more robustly if major USDA crop reports were not looming on Friday. March corn climbed 3 3/4 cents to $6.89 1/4 around mid-session, while December edged 1/2 cent higher to $5.75 per bushel.

After having rebounded from perceived oversold levels Monday, soybean futures traded rather weakly Tuesday morning. As in the corn market, the looming release of USDA data is probably limiting futures activity and will very likely to continue doing so prior to the noon (EST) Friday release. However, the U.S. soybean market is subject to shifting ideas about the size of the South American crop at this time of year. Thus, early CBOT weakness can be partially blamed upon an increased production forecast from a Brazilian firm. Still, Chicago traders may move to even their positions prior to the Friday report, which, given recent grain and soy losses, would seem to entail active buying. March beans had slipped 1/4 cent to $13.88 1/4 just before the lunch hour, while March soyoil had gained 0.02 cents to 49.98 cents/pound and March meal lost 0.4 cents to $408.5/ton.

It looks as if the Southern Plains and southern portion of the Midwest will be blessed with substantial rainfall over the next 2-3 days, thereby seeming to presage a significant improvement in winter wheat production prospects. However, forecasters are also anticipating a major shift back toward frigid temperatures over the U.S. midsection next week. That seemed to raise fears of winterkill in some areas of the Winter Wheat Belt, which in turn appeared to be push wheat futures higher in the face of flat-to-weak corn and soybean prices. March CBOT wheat surged 7 cents to $7.58 1/4 late Tuesday morning, while March KCBT wheat had jumped 9 cents to $8.16 1/2 and March MGE futures rallied 4 3/4 cents to $8.51 1/4 per bushel.

The surprising weakness exhibited by choice grade beef cutout Monday likely played a significant role in undercutting CME live cattle futures. But traders may also have harbored concerns about the size of feedlot showlists this week, since producers reportedly sold few animals last week. Those fears were at least partially confirmed this morning, when a Panhandle feedlot reportedly sold a sizeable lot for 128 cents/pound, which essentially matched the consensus price posted in the Southern Plains last week. Still, optimism about the first quarter outlook is apparently providing persistent support. February cattle were unchanged at 133.00 cents/pound in late-morning action, while April suffered a 0.32-cent loss to 136.37 cents/pound.

Many in the livestock industry probably believe greatly elevated cattle and beef prices will go far in supporting the hog and pork complex as well. Thus, the traditional mid-winter swine rally might be exaggerated if/when fed cattle prices surge to fresh record highs. That may at least partially explain the gains posted by the nearby CME hog contracts this morning. Conversely, one has to wonder if deferred hog futures are falling prey to suspicions that the surprisingly large numbers stated on the late December USDA Hogs & Pigs report bode ill for the summer-fall price outlook. That might explain the mixed nature of Tuesday morning trading. February hogs rose 0.30 cents to 86.60 cents/pound around mid-session, while the June contract slipped 0.05 cents higher at 98.50.


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