Bulls spreading seemed to hit the ag markets Wednesday

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Corn futures rallied Wednesday in apparent response to indications that low temperatures had frosted early-planted corn in the Southeast Tuesday night. That may largely negate the early-planting advantage those states hoped to enjoy. Traders also seemed to favor bull spreads ahead of the Thursday morning release of the USDA Grain Stocks and Prospective Plantings reports, since the former is expected to indicate short-term supply tightness, whereas the latter will likely point to large 2013 crops. May corn had risen 5.0 cents to $7.3525/bushel at its Wednesday close, while was unchanged at $5.71.

The soybean market rose modestly Wednesday night despite a general lack of supportive news. Indeed, talk that surging South American supplies were blunting demand for U.S. beans undercut prices Wednesday morning. Ultimately, the juxtaposition of likely supply conditions likely to be implied by the Thursday morning USDA reports seemed to inspire bull spreading. That is, the grain stocks data will likely be quite small, whereas spring soybean plantings could set a record. Of course, the actual reports may not live up to those expectations. May soybeans closed 6.0 cents higher, at $14.5375/bushel Wednesday afternoon, while May soyoil was unchanged at 50.82 cents/pound, while May meal rose $2.9 to $423.1/ton.

Talk of strong export demand and frost damage to west Texas wheat fields reportedly supported wheat futures Wednesday. We also wonder if the latest Doane tweets showing poor wheat conditions in Nebraska and Eastern Colorado are supporting the market. The latest gains may have a substantial technical component as well, since May CBOT wheat futures pushed significantly above their 40-day moving average (MA). May CBOT wheat futures rallied 5.25 cents to $7.3675/bushel in late Wednesday afternoon action, while May KCBT wheat surged 5.5 cents to $7.74, and May MGE futures gained 2.5 cents to $8.13.

Cattle futures rallied Wednesday in response to belated news that a few head had traded fully steady at 125 cents/pound in the Panhandle. That probably signals steady-firm cash prices later in the week. Bulls obviously hope for a burst of seasonal strength over the next few weeks. The CME response may also have been exaggerated by widespread short covering. April cattle jumped 1.40 cents to 127.35 cents/pound at its Wednesday settlement, while August surged 1.40 cents to 124.02. Meanwhile, April feeder cattle futures leapt 1.80 cents to 140.40 cents/pound, and August advanced 1.45 cents to 149.25.

Although industry sources indicated cash prices had risen again Wednesday morning, deferred CME lean hog futures fell rather sharply. The drop very likely resulted from pre-report analyst surveys ahead of the quarterly USDA Hogs & Pigs report due out Thursday afternoon (at 2:00 PM CDT). Those data imply the industry has continued expanding despite poor margins and greatly elevated feed costs. April hogs apparently reacted to the cash strength, rising 0.57 cents to 80.07 cents/pound at the Wednesday close, while June dropped 0.40 cents to 90.67.

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