Exports dominate corn, soybean markets on Thursday

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Disappointment with the weekly Export Inspections result apparently dragged corn futures downward Wednesday. Indeed, poor exports have been the dominant theme of the yellow grain market recently, with traders persistently hoping prices have fallen far enough to spark renewed international buying. However, that may not be the case, as exemplified by overnight news that a large Taiwanese concern had canceled a tender for 23,000 tonnes of U.S. corn and 12,000 tonnes of beans. That probably accounts for the continued weakness seen in early-morning trading. March corn seems set to begin the Chicago session 2 1/2 cents lower at $6.90 3/4, while December is down 2 cents to $5.97 1/4 in early trading.

The soybean situation seems somewhat less oppressive than that for corn. Not only were the results of the weekly Export Inspections report somewhat better, global developments appear much more supportive of the soy outlook. Excessive rainfall remains a real concern in Argentina. In fact, those worries have now spread to Malaysia, where traders are fretting about the impact widespread flooding may have on forthcoming palm oil production. That news very likely powered the overnight bounce in soybean oil and in soybeans. January beans bounced 2 1/2 cents to $14.27/bushel early this morning, while January soyoil jumped 0.31 to 48.60 cents/pound; January meal slipped $0.5 to $430.8/ton.

As in the corn pit, wheat traders have hoped recent wheat losses would boost exports, but the weekly Export Inspections report indicated a disappointing wheat sales total as well. Negative post-Christmas financial market trends (i.e. U.S. dollar strength versus the Japanese yen, energy price gains and equity index losses) probably depressed golden grain values. The technical situation in the wheat pits has also deteriorated, with nearby CBOT wheat seemingly having the potential to test the $7.60 area in the near future. There didn’t seem to be much substantive wheat news overnight. March CBOT wheat followed its Wednesday drop with another 5 1/4-cent slide (to $7.69 1/4 per bushel), while March KCBT wheat dipped 1 1/2 cents to $8.23 and March MGE futures fell 5 3/4 cents to $8.63 1/4.

Cattle futures held up rather well in the wake of the disappointing December 21 USDA Cattle on Feed report Monday, then moved modestly higher Wednesday. Bulls are almost surely relying upon the prospect of persistently tight fed cattle supplies and robust demand from domestic and export sources for underlying strength. The rise was very likely sustained by the latest wholesale news, since beef cutout values rose significantly. If choice cutout were to surge to fresh highs over 2.00/pound in early 2013, the resulting improvement in packer demand might push cattle prices substantially higher. On the other hand, nearby futures are already trading at substantial premiums to country values. February live cattle slipped 0.10 cents to 133.67 cents/pound overnight, while April dipped 0.05 cents to 137.20 cents/pound.

After surging in reaction to the bullish December 21 Cold Storage report on Christmas Eve, hog futures gave back a portion of those gains Wednesday. CME traders expecting the cash and wholesale situations to favor bullish interests after January 1 pushed prices somewhat higher yesterday morning, but ultimately proved unable to prevent a modest daily setback. Traders may have been reacting to weak wholesale quotes, despite the fact that direct market prices across the Corn Belt rose substantially. Their premiums to spot values may have handicapped bullish efforts to push them even higher. They slipped further in overnight trading. February hogs were down 0.17 cents to 87.27 cents/pound and the June contract dipped 0.20 cents to 100.45.


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