WEAKER TONE OVERNIGHT... Grain and soy futures were firmer early in overnight trade, but are favoring the downside this morning. As of 6:30 a.m. CT, corn futures are trading fractionally to 3 cents lower, soybeans 1 to 6 cents lower, Chicago wheat steady to 1 cent lower, Kansas City wheat mixed and Minneapolis wheat mostly 2 to 3 cents higher. The U.S. dollar index is under pressure this morning.
ISAAC CONTINUES TO STRENGTHEN, TO MAKE LANDFALL LATE TODAY... Tropical Storm Isaac continues to strengthen and move in a northwesterly path in the U.S. Gulf. Isaac is expected to reach hurricane status before making landfall later today, according to the National Oceanic and Atmospheric Administration (NOAA) National Hurricane Center. The storm's fury will be on Louisiana and portions of the Mississippi Gulf Coast, but other areas of the region will be impacted. Heavy remnant rains are likely through the Mid-South the next couple of days and could reach areas of the Corn Belt by the weekend.
EL NINO BUILDING, BUT COULD WEAKEN BY LATE THIS YEAR... El Niño conditions continue to gradually build, according to the Australian Bureau of Meteorology. The bureau says, "While tropical Pacific sea surface temperatures and the Southern Oscillation Index (SOI), approached or exceeded El Niño values during the past fortnight (two weeks), other indicators such as the trade winds and tropical cloud patterns have yet to show typical El Niño signatures. Climate models surveyed by the Bureau of Meteorology suggest sea surface temperatures in the tropical Pacific Ocean will maintain values close to, or greater than, typical El Niño thresholds before returning to neutral towards the end of 2012 or early 2013."
CORN, BEAN CCI RATINGS SLIP... When USDA's weekly crop condition ratings are plugged into the state-weighted Pro Farmer Crop Condition Index (0 = crop failure; 500 = perfect crop), the corn crop dropped 5 points to 243 and the soybean crop slipped 2 points to 274. Crop deterioration in Illinois, Minnesota, Ohio, South Dakota and Wisconsin more than offset modest improvement in some of the other key states.
CHINA FACES HEAVY CRUSH OVERCAPACITY... China's soybean crush capacity has reached 125 MMT but the average rate of operation is below 50%, according to China National Grain and Oils Information Center. The state-run agency says 2011-12 (Oct.-Sept.) soybean crush will hit 60 MMT and rise to 63 MMT in 2012-13.
FIRM CUTS UKRAINE CROP, EXPORT FORECASTS... Private firm UkrAgroConsult cut its Ukraine grain crop forecast by 1.49 MMT to 21.15 MMT due to smaller corn and barley production. The firm now sees 2012-13 grain exports of 21.15 MMT compared to its previous forecast of 23.33 MMT. Wheat exports are seen at 6.5 MMT.
CHINA TO SELL COTTON RESERVES... China National Cotton Reserves Corp. will sell 200,000 MT to 300,000 MT of state-owned cotton reserves next week in an attempt to clear out old stocks, meet domestic demand and reduce domestic prices. But the price impact is likely to be limited as planned sales are relatively small. China is thought to hold around 4 MMT of cotton in state reserves and will soon start stockpiling new-crop supplies.
ROUGH START FOR BOXED BEEF MARKET... Boxed beef prices were 16 cents (Choice) to $1.36 (Select) lower Monday and packers moved only 136 loads of product for the day. With the boxed beef market off to a sluggish start and packers buying cattle for a shortened slaughter schedule next week, they have the early upper hand over feedlots in this week's cash cattle negotiations.
PORK MARKET SLUMPS... The pork cutout value was $1.60 lower Monday and packers moved only 48.13 loads of product on the day. With the pork product market slumping, an abundant supply of market-ready hogs and a shortened slaughter schedule ahead, the cash hog market will remain under pressure.
OVERNIGHT DEMAND NEWS... Japan purchased 21,100 MT of milling wheat. Jordan tendered for 100,000 MT of optional origin wheat and 150,000 MT of optional origin barley.