Resurgent concerns about emerging drought over major crop-growing areas of Southern Brazil and Argentina powered the grain and soybean complexes sharply higher Wednesday. Bulls may also have been joined by technically-inspired buyers, especially after the nearby March future seemed to use its 10-day moving average (MA) as a springboard to higher levels. Otherwise, there was not a great deal of news concerning the corn outlook, which probably explains the modest price fluctuations posted after the CBOT pit session commenced. We still suspect many traders are waiting for the Thursday morning release of the weekly Export Sales data before they reconsider their positions. March corn closed 10 3/4 cents higher, at $7.40 1/4, as the Wednesday pit session concluded, while December advanced 6 cents to $5.93/bushel.
Some wire service reports cited fresh news of soybean sales to China for a portion of the Wednesday jump by soybean futures, but the fact that those deliveries were deferred to the 2013-14 crop year robbed the news of its market-moving power. The possibility that large areas of Argentina and Southern Brazil could experience hot, dry weather through early February was the more likely driver of the early futures surge. Having moving average (MA) support limit recent intra-day losses very likely encouraged technical buying as well. On the other hand, the March future could not sustain its early move above its 100-day MA, which may now serve as tough resistance. As with their counterparts in the corn pit, soybean traders are probably anticipating the weekly Export Sales reports to be released tomorrow morning. March beans soared 27 cents to $14.78 3/4 at the Wednesday close, while March soyoil spiked 0.89 cents to 52.60 cents/pound and March meal jumped $9.0 to $432.7/ton.
The persistent drought over the winter wheat fields of the U.S. Southern Plains dominated futures market conversations again Wednesday. The importance of the crop to be harvested from those fields will obviously be a major factor in pricing wheat during the coming weeks. When combined with the corn and soybean strength stemming from forecasts for South American dryness, the resulting wheat futures gains posted Wednesday were not terribly surprising. Of course, the weekly Export Sales data could change things tomorrow morning. March CBOT wheat futures surged 10 cents to $7.87/bushel by the end of the Chicago pit session, while March KCBT wheat gained 10 1/4 cents to $8.40 3/4 and March MGE futures vaulted 7 1/4 cents higher to $8.69.