Crop markets anticipate Friday's USDA reports

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Talk of large global supplies seemingly depressed corn futures overnight. Traders reportedly expect the USDA to boost its estimates of global corn supplies on tomorrow’s big reports. Consequently, the overnight addition to Wednesday’s losses was not terribly surprising, although an early-morning report from CONAB changed Brazil’s latest forecast very little. March corn futures slipped 1.75 cents at $4.1525/bushel Wednesday night, while May dipped 1.75 to $4.235/bushel.

The soy complex bounced despite bearish Brazilian news. CONAB also published its latest soy production estimates for Brazil this morning. The stated rise, to 90.33 million tonnes, was rather small and probably had little impact on prices, but Brazil’s Ag Minister stated that the crop could ‘easily’ top 95 million. And yet, CBOT future rallied overnight. We suspect traders were taking profits on short positions ahead of tomorrow’s USDA releases. March soybeans rebounded 6.25 cents to $12.755/bushel early Thursday morning, while March soyoil rose 0.14 cents to 37.82 cents/pound, and March soymeal added $3.3 to $415.8/ton.

Wheat markets may also have benefited from short-covering. Overnight soy gains may have sparked buying in the wheat markets as well, especially with traders likely looking for an excuse to take profits on shorts ahead of Friday’s USDA reports. Large premiums for quality grain may also be supporting the Minneapolis market. March CBOT wheat futures edged up 0.75 cents to $5.895/bushel in pre-dawn Thursday action, while March KCBT wheat futures gained 2.5 cents to $6.395, and March MWE futures climbed 4.75 to $6.3175.

Cattle futures slipped despite surging beef prices. Rising cash and wholesale prices played a big role in the recent advance, so it has been rather surprising to see the CME market stall despite strong beef gains this week. Traders may suspect warming temperatures will boost fed cattle marketings during the days ahead. As usual, much depends upon the outcome of this week’s cash trading. February cattle futures inched down 0.02 cents to 136.50 cents/pound early Thursday morning, while April futures slid 0.12 to 136.85. Meanwhile, March feeder cattle futures sagged 0.15 cents to 168.40 cents/pound, and May skidded 0.05 to 169.62.

Spot market weakness is apparently weighing upon CME hogs Thursday morning. Hog traders have been anticipating a big seasonal rally across the complex through midwinter. However, the cash and wholesale markets didn’t cooperate Wednesday, which probably explains the overnight slide in CME values. February hogs sank 0.32 cents at 85.25 cents/pound in early Thursday trading, and June tumbled 0.52 to 100.52.

An industry report on physical cotton contracts may have boosted prices last night. The Britain-based International Cotton Association reported this morning that 2013 defaults on physical cotton contracts had fallen 70% from record 2012 levels, thereby suggesting much great stability in the market. That news probably sparked short covering in the ICE cotton pit, especially with the USDA reports looming tomorrow. March cotton bounced 0.27 cents to 83.41 cents/pound just after the sun rose over New York Thursday, while July cotton rose 0.33 cents to 83.41.

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