Crop markets exhibit considerable strength Thursday morning

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Corn futures rose Thursday morning despite disappointing results on the weekly Export Sales report. Both old and new crop sales at 71,600 and 274,700 tonnes, respectively, fell well short of industry expectations. Strength spilling over from the soybean and wheat markets probably supported the yellow grain, as did the persistent tightness of old crop supplies. May corn gained 3.75 cents to $6.4325/bushel just before lunchtime Thursday, while December rose 1.0 cent to $5.29.

Tight spot markets and strong basis levels reportedly sent soybean futures higher Thursday morning. The Export Sales data seemed likely to undercut nearby futures and support new crop prices, but it had little noticeable impact later in the morning. Ideas that improving weather will not force additional Corn Belt acreage into beans may also be supporting the Chicago market. Asian palm oil gains may also be translating into soy complex strength through the oil pit. May soybeans surged 14.5 cents to $14.185/bushel late Thursday morning, while May soyoil climbed 0.45 cents to 49.63 cents/pound, and May soybean meal added $6.4 to $412.3/ton.

The wheat market finally seemed to catch on to the idea that recent frosts have seriously damaged production prospects for the U.S. winter wheat crop, since the Kansas City market led the other markets sharply higher Thursday morning. Actually, the gains were probably exaggerated by the fact that the nearby contracts were decisively breaking out above stiff chart resistance associated with their respective 40-day moving averages. May CBOT wheat futures jumped 10.25 cents to $7.02/bushel around midsession Thursday, while May KCBT wheat soared 22.75 cents to $7.6175 and May MGE futures leapt 15.0 cents to $8.3275.

Cattle futures surged yesterday in apparent anticipation of cash and wholesale strength later this week. However, the Wednesday afternoon report concerning beef cutout showed a minimal rise in choice cutout (although the select cuts rose significantly). The bulls are probably correct in their optimism, but futures seemingly have little upside potential until the expected cash strength is confirmed by events. That may explain the slippage experienced Thursday morning. June cattle edged 0.02 cents lower to 121.05 cents/pound just before the lunch hour Thursday, while December added 0.05 cents to 127.52. May feeder cattle futures slid 0.12 cents to 140.97 cents/pound, whereas August rose 0.10 cents to 150.72.

The hog market seemed to follow through upon its Wednesday surge Thursday morning. A portion of that strength probably stems from the fact that most-active June futures overcame resistance associated with its 40 and 50-day moving averages yesterday, but bulls could also point to indications of morning strength from the direct Corn Belt markets. The industry is rather obviously expecting a substantial seasonal rally during the days and weeks ahead. May hog futures climbed 0.35 cents to 88.95 cents/pound around midday Thursday, while the June contract surged 0.62 cents to 91.62.

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