Unchanged weather forecasts limited crop market action

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Corn futures slipped modestly Monday night. The general lack of grain and soy market movement can probably be attributed to the largely unchanged nature of weather market forecasts posted in the early morning hours. That is, Argentina and Southern Brazil seem likely to remain relatively dry this week, with rains predicted for early next probably proving rather small. Meanwhile, poor exports are weighing upon the domestic corn market. March corn slid 2.25 cents to $7.32/bushel in early Tuesday trading, while December dipped 1.0 cent to $5.9275.

Soybeans posted a modest advance in overnight trading. Minimally changed forecasts for dryness this week and light rainfall next week over the crop growing regions of Argentina and Southern Brazil probably limited the market reaction. Traders may also be thinking about their positions ahead of the Friday morning USDA Crop Production and Supply/Demand reports. March soybeans edged 0.75 cents higher to $14.895 in early trading, while March soyoil slumped 0.08 cents to 53.03 cents/pound and March meal rose $1.7 to $436.0/ton.

Wheat futures were mixed to lower early Tuesday morning. Weather forecasts for the winter wheat growing areas of the Southern Plains apparently limited fluctuations in the wheat pit in the overnight hours. We have to wonder if the lack of news will render the wheat markets vulnerable to further losses in the wake of the technical breakdown suffered over the weekend. March CBOT wheat futures inched 1.75 cents lower, to $7.6125/bushel, in overnight action; March KCBT wheat dropped 2.25 cents to $8.1475, while March MGE futures slipped 0.75 cents to $8.4625.

Cattle futures rallied in Monday night trading. The bounce was rather surprising in the wake of the intraday reversal seen Monday, but we suspect trader expect the cash market rise posted last week to continue during the days just ahead. News that only 17 loads were posted for delivery against the expiring February contract may also have encouraged bulls. Weak wholesale prices remain an obstacle to sustained advances. April cattle rose 0.42 cents to 132.70 cents/pound in pre-dawn trading, while August gained 0.42 cents to 129.32. March feeder cattle surged 0.77 cents to 149.65 cents/pound at the same time, while August yearlings had climbed 0.40 cents to 160.95

Hog futures moved lower again in the early morning hours. We suspect their Monday drop marked a response to the cash weakness being reported at that time. However, traders were probably hoping for seasonal wholesale strength, which might have mitigated or reversed the effects of the cash slippage. Instead, pork cutout fell over 1.0 cent Monday afternoon, with a 5.0-cent plunge in belly values dragging carcass values downward. That may bode rather ill for the short-term outlook. April hogs dipped 0.55 cents to 87.80 cents/pound in Monday night activity, while June fell 0.40 cents to 96.70.

Cotton futures continued their late slump Tuesday morning. Traders reportedly cited growing exchange-registered stocks and U.S. dollar strength for the drop. We still think the drop was largely technical in nature, especially after the nearby March contract failed to break out above the 84.00-cent level late last week. We harbor suspicions the March future could quickly test the 80-cent level. March cotton declined 0.44 cents to 81.30 cents/pound in early Tuesday action, while the new crop December contract skidded 0.19 cents to 81.30.

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