Corn futures continued their recent decline Wednesday night. We believe traders have been selling in reaction to persistent moderate improvements in South American weather forecasts. The looming release of the weekly Export Sales report later this morning and the monthly Crop Production and Supply/Demand reports Friday may have limited price shifts lately, but could spark sharp reactions if the results diverge from expectations. March corn slipped 5.75 cents to $7.1675/bushel early Thursday morning, while December slid 4.75 cents to $5.74

Soybean futures edged lower in early Thursday activity, but the drop seemed surprisingly small. That is, the overnight update to weather models apparently projected higher chances for light rainfall over Argentina and Southern Brazil next week. Moreover, Brazil raised its forecast soybean harvest 700,000 tonnes to 83.4 million; that is also well above the USDA January forecast at 82.5 million. Traders may be unwilling to sell aggressively prior to the forthcoming Export Sales, Crop Production (today) and Supply/Demand (tomorrow) reports. March soybeans had moved 1.75 cents lower, to 14.8575 overnight, while March soyoil dipped 0.02 cents to 52.43 cents/pound and March meal lost $0.5 cents to $436.6/ton.

After bouncing rather significantly Wednesday, wheat futures gave back a portion of those gains in overnight trading. Little substantive news emerged in early trading, so we are inclined to agree with wire service sources who cited position squaring ahead of the Export Sales report to be released later this morning. March CBOT wheat futures fell 2.50 cents to $7.5925/bushel in pre-dawn price action, while March KCBT wheat slumped 2.25 cents to $8.075 and March MGE futures edged 0.75 cents lower to $8.44.

Live cattle futures were mixed Wednesday night, with the expiring February future rising slightly while the deferred contracts inched lower. It certainly appears that pessimism about the demand outlook has become a dominant factor lately, especially with Russia threatening to expand restrictions upon American products over the ractopamine issue. Having choice cutout dip again Wednesday afternoon didn’t help. April cattle skidded 0.20 cents to 131.25 cents/pound, while August lost 0.02 cents to 128.10. March feeder cattle sank 0.30 cents to 147.25 cents/pound and August dropped 0.57 cents to 158.85.

Plunging pork prices depressed hog futures again in Thursday morning trading. Cash markets were mixed Wednesday, which may have limited losses, but having pork cutout drop well over 1.0 cent per pound for a second consecutive day was very discouraging. Pork bellies proved especially weak once again, but that cut was certainly not the only one under pressure. This seemingly bodes ill for short-term prospects. April hogs sank 0.30 cents to 85.95 cents/pound in the predawn hours of Thursday morning, while June lost 0.40 cents to 94.75.

After rebounding moderately from recent losses Wednesday, cotton futures slumped again in early Thursday trading. The market once again suffered from a dearth of substantive news, thereby the field open to technicians and pragmatic traders. The fact that bulls have proven unable to sustain a March futures push back above its 10-day moving average is probably weighing upon prices. Still, the looming release of the Export Sales report this morning, as well as the monthly USDA reports due out Friday could jump start the early-2013 rally. March cotton futures dropped 0.26 cents to 81.46 cents/pound in early morning trading, while the December contract was down 0.19 cents to 81.81.