Concerns about the shortage of U.S. corn and the potential impact of dry conditions in South America reportedly played major roles in boosting corn futures again Tuesday night. Traders are reportedly becoming worried about an early end to the Brazilian rainy season, which might leave second-crop corn plantings hurting for water. Quickly drying Argentine corn fields seem vulnerable as well. These developments, along with the bullish implications of the January 11 USDA reports have powered yellow grain prices upward for seven straight days, with the Tuesday CBOT advance pushing the nearby contract above major chart resistance. This seems quite favorable, but the market is likely getting overbought on a short-term basis. March corn climbed 3 3/4 cents to $7.34 1/4 in overnight action, while December rose 3/4 cent to $5.90/bushel.

Futures traders are apparently worrying about the impact of the ongoing dry spell over Argentine soybean fields. This might not be a major concern if those plants have adapted to those conditions, but it seems more likely that they are not well rooted after their wet spring. That may render their soybean crop vulnerable to hot, dry conditions. Given the optimism now dominating the grain and soybean complexes, it is terribly surprising to see soy prices rising as a consequence. On the other hand, the meal-led decline suffered Tuesday afternoon pushed nearby March beans below their 40 and 50 day moving averages, thereby suggesting the technical situation is not as favorable as that for corn. Still, the market will apparently test that chart resistance again today. March beans surged 11 cents to $14.24 1/2 in early morning trading, while March soyoil gained 0.17 cents to 51.04 cents/pound and March meal advanced $2.8 to $414.7/ton.

The lack of snow cover for much of the Winter Wheat Belt could become a major issue early next week, when an arctic air mass is expected to move into the Great Plains. For example, preliminary forecasts put Wichita Kansas temperatures in the low teens next Monday night. Thus, winter kill becomes a concern for the wheat markets. A wire service story suggested conditions over the main Russian wheat growing region were much worse, be we have to wonder if those are particularly abnormal for that area. Wheat futures posted moderate gains overnight, but remain well below chart resistance associated with their respective 40-day moving averages. March CBOT wheat rose 5 1/4 cents to $7.88/bushel in pre-dawn activity, while March KCBT wheat pushed 5 cents higher to $8.43 1/4 and March MGE futures climbed 5 1/4 cents to $8.71 1/2.

Choice grade beef values continued their recent slump Tuesday, which probably weighed upon CME live cattle futures as well. As pointed out previously, the cattle/beef industry has long been anticipating a sizeable first quarter price advance, due largely to a looming seasonal shortage of fed cattle exiting feedlots. However, beef demand is seemingly suffering at current elevated prices, thereby appearing to leave both cash and wholesale prices bumping up against past highs. The bulls inability to spark a technical reversal yesterday did not improve their situation. February cattle seem set to begin their Wednesday pit session 0.42 cents lower, at 130.00 cents/pound and April had dipped 0.32 cents to 134.10 in early trading.

Lean hog futures have recently benefited from ideas that greatly elevated beef and chicken costs would cause a shift toward more moderately priced pork. When combined with the traditional market strength often experienced during January and early February, the hog market seemed set to post a substantial advance. And while swine values have certainly outperformed their counterparts in the cattle pit lately, they have not lived up to bullish expectations either. Mixed cash quotes and a very modest rise in pork cutout Tuesday afternoon seemed to exemplify recent market action. Thus, it was not terribly surprising to see futures post a mixed to lower performance overnight. February hogs slipped 0.12 cents to 85.12 cents/pound in early morning action, while the June future edged 0.05 cents higher to 96.65.

The cotton industry is seemingly quite confident that the global situation will remain relatively tight despite the huge stockpile now held by the Chinese government. That optimism was apparently confirmed Tuesday, when Chinese mills reportedly turned up their noses at cotton being auctioned by government officials. Prices continued rising overnight, possibly due to a report that spot Indian supplies are likely to fall about 6% short of year-ago levels. Having the March ICE contract push above its 200-day MA Tuesday is probably attracting technical buying as well. March cotton had risen 0.38 cents to 76.59 cents/pound in Wednesday morning trading, while December dipped 0.17 cents to 78.90.