Soy, meal lagged the other ag markets Thursday morning

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Export news boosted the grain markets Thursday morning. Not only did the weekly USDA Export Sales report state last week’s total above forecasts, the USDA also released daily reports detailing substantial sales earlier this week. The gains were particularly impressive when viewed within the context of concurrent U.S. dollar strength. March and May corn futures ran up 4.0 cents to $4.29 and $4.375/bushel, respectively, in Thursday morning trading.

The export data was less supportive of the soy complex. In contrast to the favorable grain results posted on the weekly Export Sales report, those for soybeans and meal fell short of expectations. For example, last week’s bean sales reached 415,600 tonnes, whereas forecasts ranged between 700,000 and 900,000 tonnes. The overnight rise in Asian palm values seemingly supported oil values. January soybeans dropped 6.25 cents to $13.1775/bushel around midsession Thursday, while January soyoil gained 0.10 cents to 39.16 cents/pound, and January soymeal sank $2.7 to $438.5/ton.

Short-covering probably exaggerated the wheat market bounce. The weekly USDA Export Sales report stated last week’s wheat total at 656,100 tonnes, which obviously compared well to the top pre-report prediction at 400,000 tonnes. That news very likely triggered a sizeable round of short-covering in the wake of recent losses, thereby seeming to exaggerate the futures reaction. March CBOT wheat futures rose 4.25 cents to $6.17/bushel by late Thursday morning, while March KCBT wheat futures advanced 2.75 cents to $6.565, and March MWE futures added 3.5 to $6.5025.

Kansas strength probably sparked CME cattle buying. Cattle futures looked doomed to fresh short-term losses after Nebraska cattle traded $1-$2/cwt (cents/pound) lower Wednesday than they had last week. However, Kansas producers reportedly proved able to extract packer bids just $1 lower than last week this morning, which in turn appeared to trigger fresh buying in the CME pit. February cattle futures bounced 0.45 cents to 132.80 cents/pound just before lunchtime Thursday, while April futures rose 0.47 cents to 133.92. Meanwhile, January feeder cattle futures surged 0.67 cents to 166.72 cents/pound and March added 0.50 to 166.35.

Hog traders also seem optimistic. Tuesday’s cash hog quotes were surprisingly strong, thereby sparking a strong Wednesday rally. That was probably exaggerated by the stock market surge. The idea that the hog/pork complex is posting a seasonal low may explain the mixed response to the cash and wholesale weakness posted yesterday afternoon as well as today’s early firmness. February hog futures rallied 0.17 cents to 86.52 cents/pound in early Thursday trading, and June gained 0.22 to 100.15.

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