Debate Over Weather Effects Could Keep Markets Choppy

Grain and soybean traders may spend the day debating the effect of an arctic blast on US wheat production, resilient corn and soybean demand against increasing South American supplies and declining prices there.  The result could be a choppy trade unless something comes to the forefront of importance.\r\n   The eastern third of the continental US continues to dig out from an early week storm, but in its wake is a frigid blast that threatens to disrupt river and rail transit.  This National Weather Service map shows the advancing high pressure system that is bringing the cold air to the Plains states:  <a href=\”http://www.hpc.ncep.noaa.gov/html/sfcloop/radsfcus_exp_test.html\”>Your text to link…</a>\r\n   Wheat futures, especially Kansas City Hard Red Winter, are seeing some buying interest as the cold air sweeps in since a large portion of the area is now devoid of protective snow cover, leaving the crop vulnerable to winter kill.\r\n   Exacerbating the winter-kill chances is the ongoing drought in the Central and Southern Plains as dry soils increase plant stress.\r\n   Wheat futures have been kept in check by abundant supplies elsewhere in the world, which minimizes export demand, but wheat’s weather-related support is helping corn.  However, corn may now be getting technical help after crossing back over its 10- and 20-day moving averages.\r\n   Fund traders also are initiating long corn/short soybean spread trades as the Brazilian soybean harvest continues to impress, and weather conditions there remain nearly ideal.  There also are predictions that Brazil’s winter corn seeding could be cut by low corn prices there, and the resulting support for corn versus soybeans could make the spread positions profitable.\r\n   Light cash cattle trading was reported in the Plains states Wednesday at prices that ranged from $2 to $5 higher than last week.  The range of prices varied widely, however, making an accurate comparison difficult.  Prices were reported in a range from $146 to $150 per cwt on a live basis, compared with $141 to $144 a week ago.  A few dressed-basis trades were reported at $239 to $242, compared with $228 to $229 the previous week.\r\n   The gains in fed cattle prices are said to be accomplished on the back of continued sharp gains in boxed-beef prices over the last few weeks, which have pushed packer margins well into the black.  \r\n   However, the run of sharply higher beef prices may be coming to a close.  Instead of daily gains of $2 and $4 per cwt, the USDA’s beef cutout report Wednesday showed gains of only about $0.30.\r\n   The choice cutout was reported at $240.05 per cwt, up $0.33 on the day, and the select cutout was up $0.29 at $237.44.  The choice/select spread widened to $2.61, and there were 102 loads of fabricated product sold into the spot market.\r\n   Live cattle futures Wednesday closed sharply higher, with Feb up the limit, as the aggressive cash buying forced shorts to cover and encouraged bulls to add to their positions, ADMIS reported.  Momentum is carrying nearby cattle contracts higher overnight, but deferred positions are not as strong.\r\n