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Walt Breitinger

Following a robust three-month rally in the soybean market, many U.S. farmers wondered if a critical U.S. Department of Agriculture report released Friday morning would dash their hopes for even higher prices. Although the report contained no revelations about U.S. supplies, it did show that poor weather in Argentina and Brazil had caused the South American crop to shrink in size.

The USDA report, as well as rumors that Chinese companies had committed to a large grain buy, allowed the market to hang onto the gains it had made earlier in the week.

The modest soybean, once considered a weed, is now grown by more than 350,000 farms in the United States. Although domestic demand for U.S. beans is not considered strong, the Chinese market is heating up due to an increasing population and limited farming technology in that country.

As of noon Friday, May soybeans were trading at $13.35 per bushel, up slightly on the week.

Cotton drifts lower

Cotton prices remain near two-month lows, as the USDA confirmed increasing global production in its Friday morning report.

After last year's run-up to $2.27 per pound, agricultural producers worldwide rushed to plant more cotton to capture the high prices. Since then, supplies have been building and demand has trailed off, cutting prices by more than half.

Prices spiked briefly on Monday, rising 10 percent to more than 96 cents per pound, prompted by news that India was going to ban cotton exports due to rising prices in that country. India is the world's third-largest cotton grower, and it initially seemed that India's actions might spark a worldwide rally. However, the fact that India does not export much of its crop tempered buying.

By Friday, May cotton had pulled back to 89 cents per pound, trading near unchanged on the week.

Supply glut holds gas down

Natural gas prices continued to sink lower this week, falling to the lowest closing price in over 10 years on Thursday.

With natural gas storage bulging at record levels for this time of year and production steaming ahead near record levels, the pressure of large supplies could remain for the foreseeable future.

As of midday Friday, natural gas for April delivery was trading near $2.30 per million British thermal units.

Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso, Ind. He can be contacted at (800) 411-3888 or www.indianafutures.com.

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