Thursday morning news that China had cancelled private sales of 315,000 tonnes of soybeans scheduled to be shipped in the coming weeks depressed the grain and soybean complexes. The strong advance by the U.S. dollar probably weighed upon prices as well, since such moves increase the cost of American goods faced by export buyers. Prospects for persistent corn market tightness over the short run seems to be supporting the nearby March contracts somewhat, whereas the industry is expecting a large South American harvest early in the second quarter and a big U.S. crop this fall. Traders are unlikely to push the agricultural markets very far in either direction before the release of the weekly Export Sales reports later this morning. March corn slipped 1 1/2 cents to $6.87 3/4 in early morning trading, while December dipped 2 cents to $5.85 1/2 per bushel.

The USDA announced Thursday morning that China had cancelled delivery of 315,000 tonnes of soybeans previously scheduled for the 2012-13 crop year. As one would expect, CBOT futures reacted poorly. Futures actually bounced substantially around midsession despite that news, but ended the day having fallen moderately. Still, the recovery from intra-day lows might be interpreted as signaling a forthcoming technical bounce. That may be a big reason the soy complex was decidedly mixed in overnight trading. We wouldn’t be particularly surprised by a strong positive reaction if the USDA Export Sales data proves supportive. March beans edged 1/4 cent higher, to $13.86 3/4 in overnight activity, whereas March soyoil fell 0.26 cents to 50.44 cents/pound and March meal advanced $1.2 to $405.4/ton.

The wheat markets proved even more amenable to a Thursday rebound than did their counterparts in the corn and soybean pits. The fact that current circumstances do not appear very conducive to wheat gains rendered the rise that much more impressive. Ultimately, traders seemingly concluded the recent drop was overdone and the market is now due for a significant rebound. Prices were mixed in Thursday night trading, thereby suggesting the results of the weekly Export Sales report will set the tone of trading for the balance of the week. March CBOT wheat slid 1 cent to $7.54 1/2 in early morning trade, but March KCBT wheat rose 1 cent to $8.12 ¼ and March MGE futures advanced 2 3/4 cents to $8.49 1/4 per bushel.

Cattle futures surged to fresh highs Thursday in apparent response to strong wholesale gains and to widespread anticipation of another jump in country prices for fed cattle before the weekend. Prices rose farther in overnight action despite a modest afternoon setback in beef cutout. Again, the traditional first quarter cattle rally will probably be exaggerated by extreme tightness in feedlot holdings of fed cattle, especially if Great Plains weather deteriorates during the coming weeks. February cattle seem set to begin the Friday pit session 0.12 cents higher, at 133.97 cents/pound, while the April future was last quoted 0.15 cents higher at 137.47 cents/pound.

CME lean hog futures tried to follow their live cattle counterparts sharply higher Thursday, but ended the day posting much less impressive gains. Still, the situation seems quite supportive of short-term swine prospects, especially after pork cutout jumped 1.71 cents Thursday afternoon. Cash quotes also proved quite firm. Bulls are rather obviously banking upon a sizeable seasonal advance over the next six weeks, as well hog price history implying a strong historical tendency to jump to annual highs in late spring and/or early summer. Still, the hog/pork situation isn’t nearly as tight as that for cattle and beef. February hogs gained 0.10 cents to 86.50 cents/pound overnight, while June futures inched 0.05 cents to 99.00 before the Chicago opening.

Cotton futures apparently moved in opposition to developments in the grain and soy markets Thursday and eventually closed moderately higher on the day. Ultimately, recent news has been much more supportive of the white fiber market than for its crop counterparts, which has been reflected in a moderate upward trend versus their general declines. Still, a short-term test of major support at moderately lower levels seems rather likely at this point, especially if the result of the weekly USDA Export Sales report disappoint the domestic industry. March futures slipped 0.07 cents to 75.32 cents/pound in overnight action, while December fell 0.56 cents to 78.91 cents/pound.