Crop traders seem confident about export prospects

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Corn futures rose in concert with wheat and soybeans Wednesday night. There was little news that seemed particularly pertinent to the market, with wire service sources arguing that prices have fallen far enough to render U.S. grains more attractive to international customers. The nearby March corn contract is also threatening to break out above resistance associated with its 10 and 20-day moving averages. March corn was trading 3.50 cents higher, at $7.13/bushel early Thursday morning, while December inched 0.25 cent lower to $5.535.

Nearby soybean futures also rose moderately in early Thursday trading, although the deferred contracts were apparently depressed by the prospect of surging South American supplies over the short run and a large U.S. crop later this year. Indeed, the idea that Brazil will find it very difficult to move its massive crop from interior fields to export markets is providing persistent support for nearby futures. Traders view continuing purchases of old crop U.S. soybeans as confirmation of those problems. The palm oil market remains weak, thereby weighing upon soybean oil futures. March beans gained 6.5 cents to $14.64 in Wednesday night activity, while March soyoil slipped 0.10 cents to 49.17 cents/pound, whereas March meal climbed $3.3 to $432.6/ton.

Wheat futures rallied rather sharply in overnight trading. Given the prospect of much better U.S. winter wheat production in the wake of recent storms, the rise is very impressive, especially since it has not been powered by any obvious news. We think supportive technical factors are in play, but tend to agree with wire service sources arguing that prices have fallen far enough to render American wheat very attractive to international buyers. We may see proof of that later this morning when the USDA releases its weekly Export Sales report. March CBOT wheat futures jumped 7.25 cents to $7.115/bushel Wednesday night, while March KCBT wheat surged 11.25 cents to $7.455, and May MGE futures leapt 8.5 cents to $8.05.

Cattle futures generally moved modestly lower Wednesday night. The expiring February contract proved the exception, rising slightly on its last day of trading. Actually, the overnight weakness was rather surprising, since the Wednesday afternoon wholesale beef report indicated that cutout values has risen sharply once again. Traders may think the current conditions stressing feedlot cattle imply more will show up during spring and summer. They may also be harboring continuing concerns about the impact of the mooted Federal government sequester upon the packing and cattle feeding industries. April cattle lost one tick to reach 129.85 cents/pound early Thursday morning, while August was unchanged at 125.55. Meanwhile, March feeder cattle dropped 0.65 cents to 140.80 cents/pound, and August fell 0.87 cents upward to 153.70.

CME lean hog futures continued their recent slide in early Thursday morning action. Concerns about the market impact of the Federal government sequester may be weighing upon the hog and pork complex, but traders also seem to be reacting to persistent cash weakness. Late firmness at the wholesale level is probably providing some support, but the industry is probably going to need to see much more of the same before they will be willing to push futures higher. April hogs slipped 0.07 cents lower to 80.92 cents/pound early this morning, while June lost 0.12 cents to 91.10.

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