Traders are likely preparing for today's WASDE report

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Traders were likely covering shorts Tuesday night. The monthly USDA WASDE report will be released at 11:00 AM CDT this morning, with crop producers and consumers closely watching forecast carry-out figures for 2013/14 and 2014/15. Corn futures rose modestly overnight, which probably reflected broad short-covering in the wake of big spring losses. July corn rose 0.5 cent to $4.46/bushel shortly after sunrise Wednesday, while December added 0.5 cent to $4.455.

The soy complex was mixed overnight. Soybean and meal futures have held up much better than their grain and cotton counterparts lately, so there’s probably less impetus to cover short positions ahead of the WASDE report. Indeed, bulls may be actively liquidating longs. Asian palm losses are once again weighing on oil. July soybeans inched up 0.25 cent to $14.6275/bushel Tuesday night, while July soyoil sank 0.13 cents to 38.81 cents/pound, and July soymeal bounced $2.7 to $487.2/ton.

The wheat markets also rose on short covering last night. The industry views the global wheat situation as likely dominating the price outlook for the foreseeable future, with weak U.S. production unlikely to do much to boost grain values. Thus, the global data on today’s monthly WASDE report will be closely watched. It was terribly surprising to see prices rebound modestly beforehand. July CBOT wheat futures gained 2.75 cents to $6.04/bushel in early Wednesday trading, while July KCBT wheat edged 3.0 cents higher to $7.29 and July MWE futures bounced 2.5 to $7.02.

Cattle futures may be suffering a technical setback. Although beef values rose again Tuesday, thereby implying good packer demand for cattle, CME futures declined in overnight trading. That probably isn’t related to the WASDE report, since the livestock markets usually ignore it. Traders are probably reacting to what looked like a reversal signal on the candlestick charts. August cattle dropped 0.42 cents to 142.97 cents/pound as the Wednesday rose over Chicago, while December fell 0.42 cents to 148.30. Meanwhile, August feeder cattle dove 0.80 cents to 204.37 and October tumbled 0.65 to 205.00.

Hog futures were mixed again Tuesday night. Cash hog and wholesale pork prices posted concerted gains on Tuesday afternoon USDA reports, which seemingly confirmed some of the bullishness already built into the Chicago market. Indeed, one wonders if the premiums already built into summer futures have captured the likely advance. August hog futures declined 0.32 cents at 129.42 cents/pound early Wednesday morning, while December rose 0.25 cents to 95.40.

Cotton futures also bounced from recent losses. Cotton futures held up well in the face of what looked like a bearish Crop Progress report yesterday; that probably reflected major technical support. Traders may also have hesitated to push prices lower ahead of today’s WASDE report. Short-covering is probably supporting nearby futures this morning. July cotton rallied 0.29 cents to 86.59 cents/pound as ICE trading accelerated Wednesday morning, while December cotton crept up 0.06 to 77.31.

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