Futures Mixed; Soybeans Provide Lift

Grain futures are mixed in overnight trading, with soybeans providing the major support, balancing concerns the USDA will raise corn and possibly soybean production in its crop reports Friday.\r\n   Prices Wednesday were pressured by rumors that Index Fund Rebalancing was not going to happen, market analysts said.  Funds are widely thought to be planning to rebalance their portfolios after corn lost 36% in value last year.  Many were counting on this support to prices.  \r\n   However, heavy volume in the closing minutes of the pit session in corn, wheat and soyoil indicated the rumors were just rumors, and prices rose again.  \r\n   The USDA announced more soybean export sales to China Wednesday, but with the Brazilian harvest gaining speed, there likely is some doubt among traders that the beans are nothing more than an insurance policy against Brazilian port congestion and heavy backlogs.  If there are fewer port problems than last year, these US orders could be cancelled.\r\n   And South American weather remains favorable for the crops.  Rains are forecast in dryer areas, and clear weather is predicted in others.  No lasting heat is expected either.\r\n   Brazil’s CONAB today raised its estimate of its soybean crop to 90.33 million tonnes, up from 90.03 million in December and well above the USDA’s latest estimate of 88 million, AgResource reported. \r\n   CONAB also raised its corn production estimate to 78.97 million tonnes from its 78.78-million-tonne forecast in December.  The USDA’s latest estimate is 70 million.\r\n   It appears evident that USDA will raise its Brazilian estimates, based on the CONAB estimates.\r\n   As US temperatures moderate from the Polar Vortex that gripped the nation last weekend, movement of grain, soybeans, cattle and hogs is expected to loosen.  The cold, ice and snow prevented much movement, and basis levels for corn and soybeans rose in some areas.  These are expected to slide back as movement increases with the warmer temperatures.\r\n   Ethanol production last week was a little larger than many expected and remains above the pace expected by the USDA.  This could be bullish for corn prices were it not for the simultaneous rise in ethanol stocks to the largest inventories since June.  Seasonal declines in ethanol demand also could pressure ethanol margins.\r\n   No cash cattle trading was reported in the Plains Wednesday.  Packer bids of $135 per cwt on a live basis failed to entice sellers who were asking $139 to $140 as futures markets and beef markets move higher.  \r\n   The USDA reported its choice beef cutout value Wednesday at $210.13 per cwt, up $2.82 on the day.  The select cutout was $207.07, up $3.51.  The choice/select spread narrowed to $3.07, and there were 137 fabricated loads sold into the spot market.\r\n   The CME Feeder Cattle Index for the seven days ending Tuesday was $171.04 per cwt, up $0.17 on the day.  By contrast, the Jan Feeder Cattle contract closed Wednesday at $168.47, up $0.42.\r\n   The US Dollar continued to gain overnight as investors are concerned that rising employment will cause the Federal Reserve to raise interest rates sooner than expected.  Rising interest rates make the Dollar more attractive, but also cut into export business, which could be a drag on the economy.\r\n