Corn futures followed up on modest Monday gains in early Tuesday trading. A wire service story concerning likely Chinese demand was probably the main driver of the rise. The report indicated that Chinese cropping problems could significantly reduce its 2013 harvest, thereby forcing it to import a record amount of U.S. corn. May corn rose 4.5 cents at $6.38/bushel in overnight electronic action, while December lost 0.5 cents to $5.315.

Soybean futures suffered last week from concerns about the spread of the new strain of bird flu across China. Traders now seem much less worried at this point, with wire service sources crediting the reduced fears for a portion of the overnight rise. Other reportedly cited bargain hunting for the rise. We do not expect a great deal of grain price movement today or Wednesday morning prior to the release of the latest USDA WASDE report. May soybeans edged 0.75 cents lower to $13.7775/bushel in pre-dawn Tuesday trading, while May soyoil added 0.03 cents to 49.55 cents/pound, and May meal slipped $1.6 to $391.7/ton.

After rallying strongly Monday, wheat futures set back overnight. One might argue that news of diminished forecasts for 2013 Russian grain production would have boosted the market, but bulls probably are not very enthused about the long side in the wake of the Monday afternoon crop condition reports. Those continued the recent trend of improving winter wheat condition ratings, which in turn implies increasing harvest potential in late spring and early summer. May CBOT wheat futures dipped 3.5 cents to $7.09/bushel by early Tuesday morning, while May KCBT wheat slid 1.5 cents to $7.435 and May MGE futures skidded 1.75 cent to $7.98.

Cattle futures rose moderately Monday, then turned mixed in overnight trading. Anticipation of seasonal cash and wholesale strength probably boosted the Chicago market to begin the week. However, the Monday afternoon wholesale report indicated that both choice and select cutout values declined modestly at a time when they were expected to rise. Continued beef losses could undercut arguments for sustained cash cattle gains during the days and weeks just ahead. June cattle rose 0.17 cents to 126.80 cents/pound in early morning trading, whereas December lost 0.25 cents to 128.30. May feeder cattle futures edged upward 0.02 cents to 144.77 cents/pound, and August added 0.07 cents to 151.82.

Hog futures proved unable to sustain their modest Monday rally in early Tuesday morning action. Monday afternoon reports of mixed to lower cash market action and flat wholesale quotes probably caused the overnight slide. Nevertheless, broad expectations for a substantial spring hog/pork rally seem likely to continue supporting the CME swine market. The lightly traded May hog contract tumbled 0.22 cents to 87.07 cents/pound early Tuesday morning, while June slipped 0.30 cents to 90.25.

Cotton futures turned sharply lower around midmorning Monday. Traders may simply think U.S. cotton plantings will greatly exceed previous estimates in the wake of the huge grain and soy losses since the March 28 Grain Stocks report. Others were reportedly reacting to technical weakness. Prices did bounce modestly overnight, possibly due to ideas that futures are now oversold on a short-term technical basis. May cotton advanced 0.33 cents to 85.71 cents/pound in early-Tuesday electronic trading, while December climbed 0.39 cents to 86.20.