Crop prices seem set to begin this week rather weakly

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Corn futures reportedly suffered follow-through losses Sunday night in the wake of the February 8 USDA Supply/Demand report. The surprisingly large increase in the forecast 2012-13 corn carryout depressed prices Friday and again in early week trading. However, many traders are probably relying upon persistently dry weather over Argentina and Southern Brazil to power a rebound. March corn slipped 1.5 cents to $7.075/bushel in Sunday night trading, while December skidded 2.0 cents to $5.6125.

Soybean futures also sustained their Friday losses at the start of trading this week. Although the domestic data on the WASDE report was supportive, having the USDA boost its forecast of global soybean carryout for 2012-13 1.1% to 60.12 million tonnes almost surely caused the ongoing price decline. Dry areas of Argentina and Southern Brazil seem unlikely to get much relief this week, which may limit the downside move. March soybeans fell 14.25 cents to 14.3825 in early-morning action, while March soyoil dropped 0.24 cents to 51.18 cents/pound, while March meal lost $5.1 to 417.3/ton.

Wheat futures proved generally firm last Friday after the USDA made a surprising cut in its forecast U.S. carryout for 2012-13. Prices sank somewhat over the weekend, which may have reflected spillover weakness from the corn and soybean pits. But we would also point out that a private forecaster published a long-range forecast this morning, which suggested dry areas of the country will be blessed with more plentiful rainfall this spring and summer. March CBOT wheat futures had slipped 2.75 cents to $7.535/bushel in pre-dawn activity Monday morning, while March KCBT wheat edged 0.25 cent higher to $8.00, and March MGE futures dipped 0.75 cents to $8.355.

After falling in apparent reaction to steady-weak cash prices last Friday, cattle futures seem set to lose further ground upon the CME opening later this morning. Substantial wholesale losses posted late Friday afternoon seemingly boded ill for the start of trading this week. Those concerns were probably exacerbated over the weekend, when Russian officials stated that their ban on U.S. meat imports over the ractopamine issue is likely to be lengthy. We expect a weak opening this morning. April cattle fell 1.40 cents to 130.12 cents/pound at their Friday afternoon close, while August dropped 1.13 cents to 126.47. March feeder cattle dove 2.20 cents to 145.00 cents/pound, and August tumbled 2.25 cents to 156.70.

Hog futures proved generally weak late last week and do not seem particularly likely to rebound to start this week. The fact that the CME lean hog index will probably continue its recent advance later today probably supported the expiring February contract somewhat, but recent cash market losses suggest short-term prospects are not very promising. On the other hand, the modest rise in pork cutout posted Friday afternoon may offer modest support. April hogs dipped 0.40 cents to 86.12 cents/pound as futures settled Friday, while June inched 0.10 cents lower to 94.50.

Cotton futures surged in the wake of the USDA report Friday and continued rising at the start of the new week. Traders were reacting to the forecast increase in U.S. exports, as well as the prediction that China would absorb a larger share of the 2012-13 global crop than previously thought. The industry does not expect those stockpiles to diminish significantly for the foreseeable future. Bulls may also be responding to a Saturday forecast from the National Cotton Council, which cuts its U.S. 2013 cotton plantings forecast 27% from the 2012 figure. March cotton climbed 0.13 cents to 82.80 cents/pound in early Monday activity, while its December counterpart surged 0.35 cents to 83.27.

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