Grains Lower Amid Month-End Book Squaring

Grain futures this morning are lower and soybeans are up, amid month-end position squaring and profit taking by investment funds.  Since these commodities have done well this month, such a move would seem logical as the funds seek to pay off investors.\r\n   Through Wednesday, March corn has climbed 21 ½ cents to settle at $4.55 ½ from the Jan. 31 settlement of $4.34.  Chicago wheat is up 44 ¼ cents to settle Wednesday at $6.00 from the Jan. 31 settlement of $5.55 ¾, although pressure in this market began a week ago after the contract put in a cycle high of $6.20 ¼ on Jan. 19.\r\n   Some corn traders are hinting that the recent rally may be about to run its course since there is no tight supply situation in this market.\r\n   Sellers also may take the bloom off the oats market now that the Wall Street Journal ran a story on the grain Wednesday.  Many traders cynically feel that once the Wall Street Journal finally reports on a long-term trend in commodity markets, the move is over.  And in this case, the story could attract speculative sellers to this lightly traded market on the notion that once the weather warms seasonally and allows freer rail transport, prices will retreat.\r\n   The pullback in oats also hints at softness in other grains.  Another old adage in grain markets is “oats knows,” and wheat is struggling despite Egypt’s GASC offering its first wheat tender of the month.  \r\n   GASC wheat tenders often support the market since Egypt is the world’s largest wheat importer, but it’s not clear that the US will win any of the business.  Argentina on Wednesday cleared another 500,000 tonnes for shipment, and Russia keeps finding exportable supplies.\r\n   Soybeans are a different story.  Fears that US supplies could drop below pipeline, or minimally functioning levels, continue to feed bullish sentiment, especially after the latest export sale to an unknown destination was announced this week.\r\n   Talk of floods trimming Brazilian soybean production are lending some support, but well-respected market analysts are saying the crop still could be very large, well able to support export markets.\r\n   Ukrainian business may be slowed for a while until they get their political crisis in order.  European stock markets saw broad losses Thursday after armed men shot their way into regional government offices in the Crimean region and raised the Russian flag early in the day.\r\n   A network of oil pipelines running from Russia through Ukraine means Moscow cannot ignore the populist push toward Europe and away from Russia.  Russian President Vladimir Putin has ordered military exercises near the Ukranian border, but Ukraine’s acting president warned that any movement by the Russian military in Crimea aside from duties of the Russian Black Sea fleets base in Sevastopol would be seen as an act of aggression.\r\n\r\nCATTLE MARKET SURGES\r\n\r\n   Cash cattle markets surged Wednesday, trading $5 to $7 per cwt higher than last week, despite heavy losses at the packing plants.  Gains in wholesale beef prices this week and yet another blast of arctic air in the Plains that could slow cash sales for the next few weeks were cited.  \r\n   Cattle traded Wednesday at mostly $150 on a live basis up to $152, compared with mostly $144 to $145 last week.\r\n   The USDA reported higher beef cutout values Wednesday, with choice boxed-beef at $218.95 per cwt, up $2.45, while select product was up $2.69 at $216.67.  The choice/select spread narrowed to $2.28, and there were 169 fabricated loads sold into the spot market.\r\n   Lower slaughter rates the last month may have finally met a day of increased demand that in-store stocks couldn’t handle, and packer demand for cattle to fill the orders jumped.  \r\n   The market also is entering a period when fed cattle supplies are expected to tighten, based on feedlot placements last fall.  Supplies are expected to increase going into the summer, but for now slaughterable supplies are snug.\r\n   Cattle markets also are getting help from a rising lean hog market where supply concerns related to the PED virus feed the buying interest.\r\n   The CME Feeder Cattle Index for the seven days ended Monday is $170.32 per cwt, down $0.25. The March Feeder Cattle futures contract settled Tuesday at $171.07, up $0.87.\r\n