Markets posted mixed results Wednesday night

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Ideas that persistently tight supplies reportedly did a great deal to support corn prices in Wednesday night trading, while other buyers were reportedly encouraged by the technical advance posted this week. We must admit to be most impressed by the gains in the face of negative news. For example, a South Korean firm rejected all offers and made no purchases in a tender for 55,000 tonnes of corn in early morning activity, thereby indicating many in the industry still view the yellow grain market as being overvalued. We expect continued choppiness in the grain and soy complexes prior to the Friday release of the various USDA reports. March corn rose 3 1/4 cents to $6.97 1/2 in overnight trading, while December edged 1/4 cent higher to $5.82/bushel.

The same forces supporting the grain markets were probably exerting some bullish influence in the soybean pit as well, but legume traders seemed somewhat less sanguine than did their corn and wheat counterparts. That may simply have reflected expectations of the coming South American crop, but bears may also have been responding to talk that China will prove much less active in pursuing bean imports after having been quite aggressive during December. The inability of the nearby March contract to overcome chart resistance associated with its 10-day moving average may also be encouraging speculative sales. March beans were trading unchanged at $13.85 1/2 in pre-dawn trading, while March soyoil continued its recent advance by rising 0.20 cents to 49.84 cents/pound and March meal dipped $1.2 to $408.4/ton.

Some wire service reports suggested overnight wheat gains had been powered by the Wednesday afternoon news that larger portions of the Winter Wheat Belt had officially been declared disaster areas by the USDA. We harbor real doubts on that score, since it didn’t change the well-known fact of persistent drought over that region. Indeed, the area is getting much-needed moisture this week. We are more inclined to credit talk of an impending Egyptian wheat tender, as well as ideas that the U.S. will capture the bulk of that business. March CBOT wheat had surged 7 cents to $7.42 1/2 per bushel in Thursday morning trading, while March KCBT wheat climbed 6 1/2 cents to $8.07 3/4 and March MGE futures bounded 5 cents higher to $8.45 1/2.

After posting a surprisingly large decline Wednesday, live cattle futures proved rather mixed in Thursday morning trading. Traders are probably rather pessimistic about the results of cash trading later today and/or Friday, since flat country price action earlier in the week was followed by the Wednesday breakdown in Chicago. Mixed wholesale results are not helping the bullish cause either. February cattle futures inched one tick higher to 131.57 cents/pound in overnight activity, while April fell another 0.35 cents to 135.00.

Widespread expectations for a substantial seasonal rally through January and early February had boosted the hog and pork complex recently. However, those hopes were substantially diminished by market developments early this week, with mixed country prices and a sizeable Tuesday drop in pork cutout doing the bulk of the damage. CME futures obviously suffered the brunt of the reduced optimism Wednesday, with most contracts losing two cents or more by the early-afternoon close. Futures proved rather mixed in Wednesday-night action, thereby reflecting the conflicting results of late-afternoon cash and wholesale reports. The nearby February remained above recent support at the mid-week close, but the breakdown pushed the spring and summer contracts to three-month lows. Those seemingly bode ill for the intermediate-term outlook. February hogs climbed 0.30 cents to 84.50 cents/pound in pre-dawn trading, while June futures slid 0.02 cents to 96.17.

Cotton futures may have benefited from the bullish leadership provided by the grain markets Thursday morning, but the latest Chinese data may also have played a significant role in the rise. That is, an overnight report indicated the Asian giant posted strong exports in December, which traders hope indicates that the Chinese and global economies are continuing their long recovery. Given the strong ties between economic growth and world cotton demand, few could have been surprised by the favorable futures reaction. Whether that strength can be sustained through the Friday release of USDA data remains to be seen, especially since the weekly Export Sales reports will be released later this morning. March cotton advanced 0.36 cents to 75.15 cents/pound in early-morning action, while December gained 0.18 cents to 78.60.

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