Improved weather forecasts for major South American grain and soybean growing regions undercut the U.S. grain and soybean complexes Wednesday and again Thursday morning. Traders also seemed to underestimate the likely result of the latest weekly report from the Energy Information Administration (EIA), since nearby corn futures proved quite firm in the wake of the release (which showed domestic ethanol production virtually unchanged from the week prior). Wire service sources cited bull spreading and background support from tight U.S. corn supplies for the late strength. We expect muted fluctuations in overnight trading, since the weekly Export Sales reports will be released tomorrow morning. March corn ended its Thursday session having risen 3 1/2 cents to $7.24 ¼, whereas December fell 4 3/4 cents to $5.85 1/2 per bushel.

Prospects for improved weather over the major crop growing areas of Southern Brazil and Argentina weighed heavily upon CBOT soybean futures late Wednesday and early Thursday, but the market posted a strong comeback before the afternoon close. However, news that U.S. exporters had contracted to deliver over 500,000 tonnes of beans to China in the 2013-14 crop year seemed to offer belated support. That probably doesn’t mean a great deal at this point, but it seemingly reminded traders of the rapid pace of recent U.S. sales ahead of the Friday morning Export Sales data. It will be interesting to see if the numbers live up to expectations. March beans settled just 1 3/4 cents lower, at $14.35 1/4 per bushel Thursday afternoon, while March soyoil rose 0.08 cents to 52.11 cents/pound and March meal slipped $2.0 to $414.7/ton.

Wheat traders seemed to lack for substantive news Thursday, which might have opened the door to an advance based upon the persistent dryness dominating the U.S. Southern Plains. And yet, the golden grain markets suffered substantial losses despite impressive corn and soybean rebounds later in the day. Bears could cite a 700,000-tonne (13%) increase in forecast Ukrainian export during the current crop year and/or significantly reduced expectations for the Friday Export Sales report for the drop. Otherwise, the market simply seems weak, especially with the March CBOT contract proving unable to top chart resistance associated with its 10-day moving average. March CBOT wheat closed out the pit session having fallen 5 3/4 cents to $7.68 1/2, while March KCBT wheat dropped 7 1/4 cents to $8.21 1/2 and March MGE futures dipped 5 1/4 cents to $8.55 1/2.

The cattle situation appeared quite weak Thursday morning, since Russian threats to restrict its red meat imports, sliding cash and wholesale values and the seemingly negative implications of pre-report surveys published ahead of the Friday Afternoon USDA Cattle on Feed report were weighing upon the market. Thus, nearby futures ended the Chicago session only slightly higher. However, the persistent futures firmness in the face of the various threats apparently persuaded beef packers to pay up for fed cattle across the Great Plains. The early-afternoon news then sent cattle futures decisively higher in early-afternoon electronic trading, thereby appearing to put an end to the recent threat of a major follow-through move to the downside. We suspect the Friday CME session will be marked by more of the same as traders prepare for the afternoon Cattle on Feed report. February cattle ended the open outcry session having risen just 0.10 cents to 125.87 cents/pound, while April closed 0.10 cents lower at 130.35.

Hopes for seasonal strength seemed to support CME lean hog futures again Thursday, with traders very likely focusing upon cash market strength at this juncture. That is, surging country prices have actually pushed the CME lean hog index to a premium over nearby futures. For example, the exchange-calculated cash equivalent is expected to reach 87.78 cents/pound Friday morning, while the February future ended the day at 87.05. Moreover, the hog/pork complex has a history of rising seasonally into mid-February, so traders are probably justified in thinking the nearby contract enjoys significant upside potential. As pointed out above, February hogs closed 1.07 cents higher at 87.05 cents/pound Thursday afternoon, while June futures climbed 0.80 cents to 97.40.