Profit Taking, Hedging Pressure Grains, Despite Winter Storm

Grain futures are lower in overnight trading amid what appears to be profit taking after Tuesday’s rally.  Soybeans are up a little as dry weather continues in eastern Brazil and estimates of Argentina’s crop size fade.\r\n   Adding even more pressure to the corn market was increased hede selling as farmer selling picked up on Tuesday’s rally, despite the winter storm that continues to hammer the Midwest with ice, snow and arctic temperatures.\r\n   Wheat was pressured by snow in the Plains that covered fields with six to 10 inches, protecting the crop from further cold-weather damage and bringing the promise of moisture as it melts.  Bitterly cold temperatures are stressing cattle as well.\r\n   Tuesday’s rally began with news that the National Agricultural Statistics Service had lowered its ratings for hard red winter wheat as dry-weather and cold stress took its toll on crop condition, analysts said.  Higher wheat prices pulled corn up and triggered technical buying in corn, soybeans and wheat.\r\n   But weather-related transportation problems still exist.  Roads are icy or snow covered, railroad transit times are rising as are their freight rates and rivers are frozen or ice clogged.  Things could improve later this month if forecasts for warming temperatures prove accurate, however.\r\n   Stats Canada Wednesday released latest stocks report, which was viewed as slightly bearish.  Wheat stocks were confirmed at the highest in 20 years, while canola stocks were record large and slightly above trade estimates.\r\n   Wintry weather also is slowing transport of Canada’s crops to export, and there now are fears that another big crop could exceed their ability to handle it.\r\n   Ongoing economic problems in Argentina have traders’ attentions.  The government, desperate for tax revenues, is threatening to fine farmers for holding old-crop soybeans in store as a hedge against rapid inflation and devaluation of the Peso.  If the beans come to market so the government can assess its export tax, the influx of available soybeans could pressure world markets.\r\n   However, some claim there are not as many beans left in farmer hands as supposed.  There are reports that large quantities may have slipped through the porous borders of neighboring countries, avoiding the tax and leaving less for the rest of the world.\r\n   Australia’s troubles with its Dollar also are getting more attention.  So far this year, it has been the worst-performing currency in the world, and the decline may not be over, according to John Edwards, a member of the Reserve Bank of Australia’s policy-making team, who was quoted by Dow Jones Newswires.\r\n   A weak Australian Dollar puts that country’s exports at odds with US exports, especially in Asian countries where meat and wheat are significant imports.  A weak Australian Dollar could eat into US market share in these countries.\r\n   No cash cattle trading was reported in the Plains Tuesday, and futures declined as bearish momentum from weak beef prices maintained the pressure as cash market optimism faded.  The five-area live-basis fed steer price from the USDA was $145.80 per cwt, down $2.42 from the previous week.\r\n   The USDA reported wholesale beef prices were narrowly mixed Tuesday with the choice cutout up $0.40 per cwt at $220.49 and the select cutout down $0.21 at $219.21.  The choice/select spread widened to $1.28, and there were only 80 loads of fabricated product sold into the spot market.\r\n   The CME Feeder Cattle Cash Index for the seven days ended Monday is $170.99, down $0.05 on the day, while the March futures contract settled Tuesday at $166.97, down $1.02.\r\n