Ag markets were mixed early Tuesday morning

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Corn futures sustained their moderate Monday advance overnight. News that exporters had recently contracted for moderate amounts of U.S. corn for both the 2012-13 and 2013-14 crop years seemed to boost the market. Bullish interests are almost surely hoping this is a sign of much more to come in the wake of the early winter decline. Wire service sourced also cited reduced producer selling at current low prices for the rise. March corn rose 4.25 cents to $6.9775/bushel Monday night, while December was unchanged at $5.5025.

The recent decline in soybean futures continued into Tuesday morning. Traders blame the ongoing slide upon surprisingly good Argentine rainfall lately as well as the accelerating pace of the massive Brazilian harvest. These data suggest South American soybean supplies will soon drag prices downward. Ongoing losses in the Southeast Asian palm oil market also appear to be dragging soybean oil downward. March beans dipped 3.75 cents to $14.475 early Tuesday morning, while March soyoil dropped 0.58 cents to 49.49 cents/pound, whereas March meal gained $0.6 to $426.2/ton.

The winter storm dominating weather over the Central U.S. rather obviously depressed wheat futures Monday, since improved moisture conditions are almost surely improving production prospects for the forthcoming winter wheat crop. However, the market proved surprisingly stable in overnight electronic trading. The reason for that firmness was not readily apparent, but we are inclined to think bulls are trying to hold the line at the pivotal $7.00/bushel level on the March CBOT wheat chart. The market does seem technically oversold. March CBOT wheat futures inched 0.50 cent higher to $6.9975/bushel in overnight electronic activity, while March KCBT wheat lost 2.0 cents to $7.295 and March MGE futures gained 0.25 cent to $7.8725.

Live cattle futures essentially gave back their Monday gains in overnight trading. The recent Cattle on Feed report and wintry conditions over the Southern Plains apparently powered the rally; the reasons for the reversal were not as clear. We suspect mixed readings on the afternoon beef cutout report, as well as news that 21 delivery notices against the expiring February contract played a role in the late setback. Ultimately, traders probably need to be persuaded that the cattle market can sustain a rebound in the wake of the early-winter breakdown. April cattle fell 0.42 cents to 128.00 cents/pound in overnight trading, while August declined 0.42 cents to 124.85. Meanwhile, March feeder cattle tumbled 0.85 cents, to 139.95 cents/pound, and August sank 1.12 cents to 153.02.

The hog market seems to be trying to post a short-term bottom at this point. Futures had reached substantially oversold levels Monday, then tried to mount a comeback with mixed success. Surprising firmness at direct markets west of the Mississippi River and a firm afternoon reading for pork cutout offered some support for bullish positions. Whether bullish interests will prove able to sustain a significant rebound is open to question, as exemplified by the mixed nature of overnight trading. April hogs slipped 0.32 cents to 81.57 cents/pound in pre-dawn trading, while June edged 0.10 cents lower to 90.95.

Cotton futures fell in apparent reaction to weak manufacturing news out of China Monday morning. However, the drop was probably exaggerated by the large decline in U.S. equity markets later in the day. Thus, the overnight stock market bounce may have played a role in the concurrent rise posted by ICE cotton values. There was little news pertinent to the cotton market. May cotton rose 0.55 cents to 80.77 cents/pound early Tuesday morning, while December climbed 0.41 cents to 82.92.


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