Shifting weather forecasts boosted crop markets Thursday night

The Thursday morning Export Sales report seemed supportive of the short-term corn outlook, since the USDA total topped most forecasts. Bulls were also point to firming cash quotes across the Midwest, arguing that ethanol industry demand is improving. However, the weather models implied better rainfall chances over Southern Brazil and Argentina next week, which kept a lid on prices all day. Conversely, those same models shifted toward a drier outlook when Thursday night-Friday morning runs were made. That almost surely explains the moderate gains posted at that time. March corn gained 4 cents to $7.44 1/2 in overnight activity, while December rose 2 3/4 cents to $5.93 3/4 per bushel.

The Export Sales report indicated strong soybean sales last week, thereby more than offsetting weak product totals. However, the increased potential for rainfall over large areas of the major South American soybean producing areas undercut the legume market. On the other hand, CBOT futures took back those losses in the early morning hours of Friday, because the weather models indicated reduced precipitation chances next week. At issue is whether a blocking ridge of high pressure dominates the skies over Southern Brazil and Argentina or moves west and leaves the door open for rain. At best, improved moisture conditions could boost South American grain and soy production significantly, whereas heat and dryness might do the opposite. We expect weather news to continue dominating the soybean complex for several more weeks. March beans surged 13 cents to $14.81 1/2 per bushel in early morning electronic action, while March soyoil climbed 0.47 cents to 53.33 cents/pound and March meal advanced $3.0 to $429.4/ton.

The weekly USDA Export Sales report probably disappointed wheat traders, since the result came in toward the lower end of industry expectations. And while the drought over the U.S. Southern Plains remains a pivotal factor for the wheat outlook, Thursday losses in corn and soybeans very likely weighed upon wheat futures as well. Indeed, the domestic situation apparently changed little overnight, which strongly suggests the early-morning gains posted at the various wheat exchanges resulted from spillover buying. Still, the global situation remains very tight, as indicated by European speculation that surging Russian wheat and flour prices will cause that country to cancel import duties and spark an influx of grain. Nevertheless, weather news seems likely to dominate short-term trading. March CBOT wheat futures lifted 4 1/2 cents to $7.84/bushel in pre-dawn trading, while March KCBT wheat jumped 4 1/4 cents to $8.42 and March MGE futures gained 3 cents to $8.68/bushel.