Grain markets set back from early Friday highs

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Corn futures proved unable to sustain their bullish response to the weekly USDA Export Sales report. It indicated that the latest total had reached 361,000 tonnes, which slightly exceeded the largest pre-report forecasts and topped the average for the previous four weeks by 61%. It seemingly suggests the price weakness experienced in recent weeks is finally rendering U.S. corn more attractive to international buyers. On the other hand, the late-morning setback was not at all encouraging. March corn was unchanged at $6.9075/bushel around midsession Friday, while December slipped 1.5 cents to $5.525.

Burgeoning Chinese demand is reportedly the main factor powering soybean futures higher at this point, although many in the industry would also point to persistent dryness over Argentine soybean fields for a larger portion of recent gains. However, the Export Sales report was not at all supportive of the market Friday morning, since it stated weekly net sales for the 2012-13 crop year at just 119,500 tonnes, whereas a figure in the 300,000-600,000 tonne range was anticipated. That very likely caused the setback from its early highs. Long liquidation and pre-weekend book squaring reportedly pushed prices into negative territory around midday. March beans were trading 3.5 cents lower, at $14.8425 late Friday morning, while March soyoil had fallen 0.73 cents to 50.58 cents/pound; March meal gained $1.9 to $439.2/ton.

Wheat futures reacted well to the weekly Export Sales report, but suffered a belated setback as well. The USDA stated the result for last week at 699,300 tonnes, whereas the largest pre-report forecast had reached ‘just’ 600,000. When combined with their early soybean-led gains, it was not at all surprising to see nearby wheat futures trading strongly soon thereafter. Conversely, the mid-morning bean reversal weighed upon grain futures as well. March CBOT wheat futures had risen 1.25 cents to $7.225/bushel around midsession Friday, while March KCBT wheat lost 0.25 cents to $7.57, and March MGE futures climbed 3.25 cents to $8.0975.

The weekly USDA Export Sales report may have boosted cattle futures Friday morning. The data is usually seen as old news, since another USDA agency publishes a preliminary weekly sales figure each Monday, but the fact that the latest figure was the largest since last June probably encouraged CME buying. Other wire service sourced cited the stress exerted by wintry weather upon cattle in Great Plains feedlots for a portion of the rise, since such conditions have the potential to reduce market-ready supplies. April cattle climbed 0.52 cents to 127.52 cents/pound in late-morning activity, while August gained 0.20 cents to 125.35. Meanwhile, March feeder cattle advanced 0.55 cents to 141.25 cents/pound, and August had jumped 0.72 cents to 154.20.

Hog futures traded in mixed fashion through much of Friday morning. Discouraging cash market developments apparently remained the general theme as the weekend loomed, with markets across the Midwest reportedly called 0.5 to 2.0 cents lower in early trading. We suspect we have considerable company in thinking the market will post a major seasonal reversal at some point in the days and weeks just ahead, but the complex is certainly offering few hints of an impending reversal at this time. April hogs edged 0.5 cents higher, to 82.45 cents/pound in late Friday morning trading, while June slipped 0.07 cents to 91.62.

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