Corn prices are expected to open steady to a nickel higher on Wednesday. Corn contracts managed a small rally in overnight trade. Traders were disappointed on Tuesday when USDA did not raise the feed use forecast and lower ending stocks, but the old crop supply situation remains tight. The modest bounce expected at the start of trading on Wednesday will be at least in part due to profit taking following two days of big price declines.
Soybean prices are expected to open steady to a little higher on Wednesday. Market fundamentals remain bullish for soybeans, but technical factors could have an impact on prices. Changes in USDA’s forecast in April were positive for soybeans with lower U.S. ending stocks and smaller South America crops. But the market is overbought with record large net-long positions. A likely higher opening in the stock market should be positive for commodity futures prices.
Wheat prices are expected to open 5 cents to 10 cents higher. The higher opening will at least partially offset the price declines recorded on Tuesday. The smaller world and U.S. ending stocks forecast in USDA’s April update were positive developments, but they don’t change the fact that wheat supplies are still large. Some weakness in the value of the dollar was at least partly responsible for the improvement in wheat prices overnight.
Cattle prices are expected to open steady to lower on Wednesday. The short-lived rally in boxed beef prices ended on Tuesday with prices mixed at best. Cash cattle trade was light on Tuesday, but prices for the cattle that did sell were down $1 to $1.50 compared to last week. The near-term outlook for cash cattle prices is not very strong and weakness in the cash market will weigh on futures prices.
Hog prices are expected to open 50 cents to 70 cents lower. Hog futures prices continue to be driven by developments in the cash market, and the developments in the cash market are generally negative. Cash hog prices and the cutout value declined again on Tuesday. The cut-out value set a new low for the year, dropping below $78 per cwt. Hog futures prices will continue to drift lower until there are some signs that cash prices are moving higher.
Cotton prices are set to open 20 to 30 points higher on Wednesday. The information from Tuesday’s USDA forecast was mixed, with tighter U.S. supplies but bigger supplies in the rest of the world. Big adjustments were made to India’s supplies and China continues to build stocks. It is too early to gauge the size of the 2012 crop, but most areas are starting this growing season with more soil moisture than was the case in 2011.