Soybean futures reacted strongly to the bullish results of the weekly export sales report on Thursday, but gave back much of the rise later in the day. They surged again in overnight activity, thereby giving rise to suspicions that large export sales are being transacted at this time.

Such ideas were probably exaggerated by the monthly NOPA crush report released Friday morning; the November crush met expectations, but the result was the largest monthly figure since early 2010. January beans surged 18 1/2 cents on the day and ended the week at $14.95/bushel. January oil climbed 0.94 cents to 49.94 cents/pound, while January meal rose $2.6 to $457.9/ton.

Industry insiders suggested the recent processing rate can’t be sustained, which in turn implies prices will have to rise in order to ration demand through the first three quarters of 2013.

Despite ongoing concerns about the strength of demand for U.S. corn at current elevated prices, prices rebounded Friday morning. The concurrent surge posted by the soybean market probably played a substantial role in the rise as did the slump suffered by the U.S. dollar, since such losses make American products cheaper for international clients. Bulls may also have been reacting to news that U.S. corn had captured a sizeable portion of a big purchase made by a South Korean firm after having been shut out of a similar transaction earlier in the week. March ended the week having jumped 8 3/4 cents to $7.29/bushel, while the December 2013 contract rose 1 1/4 cents to $6.27 1/4 per bushel.

After having tested chart support at the psychologically important $8.00/bushel level Thursday, CBOT wheat futures bounced significantly today. A March futures drop below that point might spark a larger early-winter, breakdown, but the drop apparently attracted fresh buying at those lows. The big soybean surge probably offered spillover support, as did late-week U.S. dollar weakness. We also have to wonder if the weather system sweeping into the Plains from the Southwest is now expected to drop less rainfall on parched wheat fields than was previously anticipated. Persistent dryness could render the winter wheat crop very vulnerable to damage from frigid weather. March CBOT wheat rebounded 5 1/2 cents to $8.14/bushel, while March KCBT wheat rose 2 1/2 cents to $8.65 1/4 and March MGE futures rose 2 to $9.01 3/4.

The persistent tightness of the cattle and beef supply/demand situations continues supporting CME live cattle prices. Indeed, the implied optimism seemed well justified Friday, when wire services reported that Panhandle fed cattle were changing hands around 124.50 cents/pound today. That represents a significant victory for feedyard managers, since prices had dipped to 124.00 last week and current circumstances appeared less conducive to market strength. For example, packer margins remain well in the red, while wholesale prices keep struggling to mount a serious challenge of the $2.00/pound level. February cattle surged 1.12 cents to 132.60, while April jumped 1.40 cents to 136.70 cents/pound.

Despite the big cattle rally Friday and indications of considerable cash strength in early-morning trading, CME lean hog futures finished the week on a down note. The prospect of a substantial slowdown in pork buying during the run-up to the year-end holidays, as well as depressed packer buying during that same period may have weighed upon swine values. Midday news of a two-cent drop in ham prices confirmed the usual pre-holiday breakdown and probably added to the negative atmosphere. Still, swine traders are fully cognizant of the upside potential open to the market once the industry has gotten past its holiday disruptions. February hogs fell 0.50 cents to 85.45, while June slipped 0.17 cents to 99.90 cents/pound to end the week.