Resurgent concerns about emerging drought over major crop-growing areas of Southern Brazil and Argentina powered the grain and soybean complexes sharply higher Wednesday. Bulls may also have been joined by technically-inspired buyers, especially after the nearby March future seemed to use its 10-day moving average (MA) as a springboard to higher levels. Otherwise, there was not a great deal of news concerning the corn outlook, which probably explains the modest price fluctuations posted after the CBOT pit session commenced. We still suspect many traders are waiting for the Thursday morning release of the weekly Export Sales data before they reconsider their positions. March corn closed 10 3/4 cents higher, at $7.40 1/4, as the Wednesday pit session concluded, while December advanced 6 cents to $5.93/bushel.

Some wire service reports cited fresh news of soybean sales to China for a portion of the Wednesday jump by soybean futures, but the fact that those deliveries were deferred to the 2013-14 crop year robbed the news of its market-moving power. The possibility that large areas of Argentina and Southern Brazil could experience hot, dry weather through early February was the more likely driver of the early futures surge. Having moving average (MA) support limit recent intra-day losses very likely encouraged technical buying as well. On the other hand, the March future could not sustain its early move above its 100-day MA, which may now serve as tough resistance. As with their counterparts in the corn pit, soybean traders are probably anticipating the weekly Export Sales reports to be released tomorrow morning. March beans soared 27 cents to $14.78 3/4 at the Wednesday close, while March soyoil spiked 0.89 cents to 52.60 cents/pound and March meal jumped $9.0 to $432.7/ton.

The persistent drought over the winter wheat fields of the U.S. Southern Plains dominated futures market conversations again Wednesday. The importance of the crop to be harvested from those fields will obviously be a major factor in pricing wheat during the coming weeks. When combined with the corn and soybean strength stemming from forecasts for South American dryness, the resulting wheat futures gains posted Wednesday were not terribly surprising. Of course, the weekly Export Sales data could change things tomorrow morning. March CBOT wheat futures surged 10 cents to $7.87/bushel by the end of the Chicago pit session, while March KCBT wheat gained 10 1/4 cents to $8.40 3/4 and March MGE futures vaulted 7 1/4 cents higher to $8.69.

Virtually all signs point to persistently tightening fed cattle supplies through March, but CME live cattle futures have clearly performed rather poorly lately. The main obstacle to a major rebound in CME futures has arisen from surprisingly weak wholesale prices and the underlying implication of weak demand. Indeed, in the absence of a major rise in beef prices, the cattle market seems likely to struggle. On the other hand, cash values reportedly posted a three-cent weekly jump to 125 cents/pound around noon Wednesday. Some bulls may have been shocked by the lack of bullish reaction in the Chicago pit, but we would remind readers that the nearby February future ended the day almost three cents premium to those spot values. Still, the potential for seasonal cash strength seems likely to support futures during the days and weeks just ahead. February cattle closed 0.27 cents lower, at 128.00 cents/pound, while April ended the day 0.05 cents lower at 132.92.

Hog futures have apparently suffered from disappointing developments in the cash hog and wholesale pork markets lately. Recent slippage in the CME lean hog index has exemplified that phenomenon, especially since bulls have been hoping for a sustained seasonal advance into mid-February. That may yet happen; in fact, swine values reportedly rose sharply in the Western Corn Belt Wednesday morning. When combined with the surge posted by pork loin values Tuesday afternoon (and its bullish impact upon carcass prices), that probably explains the moderate strength exhibited by CME lean hog futures late Wednesday morning. On the other hand, the lack of bullish leadership from the cattle market, particularly on a day when cash prices jumped three cents, probably caused the late hog slide. February hogs were unchanged at 87.10 at their Wednesday settlement, while June futures closed 0.10 cents lower, at 98.07.