Ag markets dipped ahead of the Friday morning USDA reports

The crop markets rallied Thursday as bearish traders covered short positions ahead of the monthly USDA WASDE and Crop Production reports due for release later this morning. Some of their bullish counterparts seemed to make similar moves overnight, with prices sliding modestly despite a general lack of news. July corn slipped 2.5 cents to $6.4625/bushel in early Friday morning activity, while December dropped 4.0 cents to $5.375.

The persistent tightness of the old-crop soy situation here in the U.S. is apparently providing persistent support for the bean complex, as indicated by the gains posted again overnight. Talk of vigorous demand from China, as well as strength in the vegetable oil markets probably provided support as well. Still, price movements seem likely to stall during the run-up to the late-morning release of the USDA WASDE and Crop Production reports. July soybean futures advanced 5.75 cents to $14.145/bushel early Friday morning, while July soyoil lost 0.01 cents to 49.21 cents/pound, and July soybean meal added $2.6 to $415.8/ton.

As in the corn market, wheat futures rallied strongly Thursday, then set back overnight. The forces causing those moves were probably quite similar as well, with short position holders exiting positions yesterday and bulls bailing out this morning. Again, the markets will probably fluctuate little ahead of the USDA reports. Conversely, wheat futures could react dramatically to the Crop Production data, since it will mark the first official estimate of the U.S. winter wheat crop. July CBOT wheat futures fell 5.75 cents to $7.1775/bushel as the sun came up in Chicago this morning, while July KCBT wheat slid 6.0 cents to $7.7325, and July MGE futures slipped 1.75 cents to $8.2375.

After news of surprising cash market weakness undercut cattle futures Wednesday, record-high beef values apparently boosted CME prices Thursday. However, traders obviously expect much more spot market slippage over the next few weeks, as indicated by early Friday morning losses and the large discounts already built into nearby futures. June cattle dipped 0.27 cents to 120.27 cents/pound in early Friday morning trading, while December skidded 0.35 cents to 124.95. August feeder cattle futures declined 0.15 cents to 145.82 cents/pound, while November slumped 0.40 cents to 150.60.

Hog prices fell rather sharply Thursday despite mixed cash news and persistent wholesale strength. Indeed, the strong afternoon pork quote seemed likely to support futures this morning. That was not the case, with prices declining moderately. That almost surely reflects the growing belief that the early-spring hog/pork rally has run its course. June hog futures descended 0.07 cents to 90.50 cents/pound, while December futures lost 0.05 cents to 77.60.

After reached a one-month high Wednesday afternoon, cotton futures dipped overnight. The market is almost surely being supported by bullish expectations for the weekly Export Sales report due out later this morning and for the monthly WASDE report to be published Friday. On the other hand, the bearish impact of Indian government efforts to sell cotton out of their huge domestic stocks appeared to weigh upon the market early this morning. July cotton dipped 0.47 cents at 87.21 cents/pound early Thursday morning, while December slid 0.54 cents to 86.23.