The Thursday Export Sales report from the USDA stated the latest weekly total at 247,000 tonnes, which topped most pre-report forecasts. The CBOT market initially reacted well to the news, but failed to sustain the subsequent advance. The midsession reversal was probably caused by the simple fact that the market was technically overbought on a short-term basis, since it had risen for nine consecutive sessions. That might explain the moderate overnight advance despite a lack of fresh bullish news and a report that a U.S. bioenergy company will temporarily halt production at two Nebraska plants due to poor operating margins. March corn rose 4 1/4 cents to $7.28 3/4 in early morning trading, while December edged 1 1/4 cents higher to $5.87 3/4.
The weekly Export Sales report was also very supportive of soybean futures, since the result easily topped forecasts Thursday morning. A Friday morning story out of Beijing confirmed that China had been the source of much of that buying, indicating the Asian giant had bought close to 2.0 million tonnes of soybeans last week. Bean futures resumed their recent rally in Thursday night trading, but a concurrent slide in soybean oil values may have limited the size of the advance. Talk of excessive palm oil inventories may have weighed upon the edible oils markets. Still, the fact that nearby soybean futures have pushed above chart resistance associated with their 40 and 50-day moving averages seems to bode well from a technical standpoint. March beans advanced 5 cents to $14.35 1/4 per bushel in Thursday night trading and March meal rose $1.2 to $415.2/ton, whereas March soyoil slipped 0.04 cents to 51.45 cents/pound
Wheat traders were probably disappointed by the Thursday morning USDA export data, since the result fell well short of forecasts. The news seemed to weigh upon the market through the balance of the session, although renewed talk of drought over the Southern Plains may have mitigated the decline. In fact, despite a lack of substantive news in the overnight hours, wheat futures bounced moderately from the losses suffered yesterday. Wire services fell back upon the drought story to explain the rise. In contrast to their corn and soybean counterparts, the nearby wheat contracts remain below their 40 and 50-day MAs, which suggests bulls may be in for some tough sledding. On the other hand, a classical technician could easily argue that the March contracts have formed modest bull flags on their charts, thereby implying the potential for a follow-through advance. March CBOT wheat bounced 3 3/4 cents to $7.85 bushel in the early morning hours, while March KCBT wheat inched 3/4 cents higher to $8.37 3/4 and March MGE futures gained 2 1/4 cents to $8.71 1/2.
Cattle futures began their Thursday session weakly after many feedyard managers had taken lower prices for their fed animals on Wednesday. But those losses were dwarfed by the negative reaction to news that Cargill plans to close a Texas beef processing plant due to poor margins. That implies diminished packer competition for fed cattle over the short term, which in turn probably presages lower prices for those animals. Bulls might reasonably that a potential packing industry return to profitability will spur them to bid more aggressively for finished cattle at some point down the road, but that probably will not happen quickly. Big losses on the afternoon USDA wholesale beef report apparently added to the downward pressure in electronic trading Thursday night and Friday morning. February cattle seem set to begin the Friday CME pit session having fallen another 0.37 cents to 126.22 cents/pound and April will likely open 0.45 cents lower, at 130.42.
Hog futures rose substantially Thursday despite the breakdown suffered by cattle in the pit next door. Preliminary reports indicating considerable strength at the direct markets west of the Mississippi River, as well as talk of firming pork prices, seemingly supported swine values. Cash prices across the Corn Belt actually topped those expectations, whereas the wholesale market proved relatively weak. That may at least partially explain the mixed nature of price action Thursday night. February lean hog futures inched 0.07 cents higher, to 86.02 cents/pound in the early morning hours, while June gained one tick to 96.67.
Cotton futures reacted well to the latest export totals, with traders once again citing strong Chinese buying as playing a major role in the market. Bulls also argued that the latest economic data implied strong apparel demand going forward. Conversely, flat equity markets and a concurrent rise in the value of the U.S. dollar seemed to weigh upon white fiber values in Thursday night trading. Nevertheless, bullish traders appear to have considerable momentum on their side at this juncture. March cotton was trading 0.08 cents lower, at 77.70 cents/pound in pre-dawn activity, while December had declined 0.29 cents to 79.00.