Tuesday’s USDA cut to its estimate of 2015 US corn production was one of the bigger surprises contained in Monday’s set of reports. When combined with the cut to soybean output and to a strikingly low winter wheat acreage figure to push the crop markets higher. Having the equity markets turn higher didn’t hurt the bullish cause. However, bulls proved unable to build upon the bullish momentum overnight, which probably reflected some quick profit-taking by some traders. The recent improvement in South American moisture conditions may also be limiting rally attempts. March corn futures dipped 0.5 cent to $3.5625 Tuesday night, while May skidded 0.75 cents to $3.615.              

The USDA’s big cut in the 2015 soybean crop and commensurate drop in the carry-out forecast also sent the soy complex higher Tuesday. This week’s early news of strong Chinese imports very likely encouraged buying as well, especially when viewed in light of recent pessimism on that score. The latter development may be why soybeans traded mixed overnight, instead of slipping in concert with the grains. Rebounding crude and palm oil futures apparently boosted soyoil quotes, whereas meal was flat. Look for South American weather and production potential to reassert their influence during the days ahead. March soybean futures edged 0.5 cent lower to $8.74 in early Wednesday action, while Mar soyoil climbed 0.21 cents to 29.39 cents per pound and March meal slipped $0.1 to $275.50.

USDA stated US winter wheat market seedings well below expectations Tuesday, with the total reportedly coming in at a six-year low. As one would expect, futures surged in response, although the gain may have been limited by the department’s increase in its 2015/16 carry-out forecast. Indeed, the bearishness of the current global situation, as well as the persistent strength exhibited by the U.S. dollar may help explain the overnight setback. Bullish profit-taking likely played a role as well. March CBOT declined 4.0 cents to $4.7725 per bushel in predawn Wednesday trading, while March KC wheat slumped 4.75 cents to $4.765 and March MWE slid 34.25 cents to $5.0275.              

Cattle futures traded weakly Tuesday despite equity markets firmness and news of Nebraska direct trading at $134/cwt, $2 over last week’s consensus quote. Having packers pay up so early in the week seems a very bullish signs, but traders seem convinced that the recent wholesale surge will so go into reverse. The noon quote for choice beef rose only modestly, while select cutout declined. Feeder futures seemed to get a bump from the cash news, but late afternoon confirmation of the beef weakness may spur more selling on today’s opening. February live cattle fell 0.62 cents to 131.60 cents/pound Tuesday, while April futures dropped 0.35 cents to 132.70. March feeder cattle rose 0.20 cents to 157.00 cents/pound and April feeders inched up 0.10 cents to 156.90.

Lean hogs closed higher Tuesday, supported by short covering as traders’ square positions in anticipation for tighter supplies. But the big surge posted by the nearby February contract almost surely represented industry optimism about the short-term cash outlook. That became evident after the close, when the Iowa-Minnesota direct market was called about 1.30 cents higher on the day. Hog supplies and pork production will almost surely decline steadily from their mid-December peak to an early-summer low, whereas demand typically surges when the spring grilling season gets underway. Those factors largely explain the increasing premiums built into the various first-half 2016 contracts. February hog futures closed 2.20 cents/pound higher at 61.90 cents/pound Tuesday,  while April hogs gained 1.83 cents to 67.30 cents/pound.              

Tuesday’s USDA data looked supportive of the cotton outlook, since department analysts trimmed US and global production and took a significant bite out of its predicted 2015/16 global carryout figure. Bulls reacted positively to the news, but proved able to sustain only a small portion of the post-report rally. That probably reflected the midday setback suffered by the equity markets. However, stocks recovered later in the day and stock index futures built upon those gains overnight. Few could be surprised that the fiber market rose in tandem. March cotton rallied 0.32 cents to 61.91 cents/pound early Wednesday morning, while May cotton gained 0.20 to 62.36 cents/pound.