SOYBEAN HEDGERS: EXIT HEDGE IN NOV. SOYBEANS... Soybean futures have pulled back sharply from highs earlier this month, but they now appear ready to strengthen again. Soybean hedgers are advised to exit the 50% hedge in Nov. soybean futures. Be prepared to make cash sales on a return to the early June highs.
Corn futures are holding around unchanged in the front-month contract and 4 to 6 cents lower in deferred contracts amid some light bull spreading.
- Too much rain in areas of the western Corn Belt is keeping tight old-crop supplies in mind, but a favorable crop in the eastern Belt is limiting support to new-crop futures.
- While USDA's Crop Condition Report yesterday reflected a slight improvement in the corn crop to 65% "good" to "excellent," the crop progress data pointed to slow development in Iowa and Minnesota, especially.
- Gulf basis fell 1 to 5 cents for June through August shipment this morning, signaling strong basis levels around the country have spurred some farmer sales.
- A drier 6- to 10-day outlook for Iowa and Minnesota and a wetter forecast for southern Illinois, Indiana and Ohio is adding pressure.
Soybean futures are mostly 2 to 5 cents higher this morning.
- Soybeans are benefiting from some light short-covering amid ideas the downside has been overdone considering tight old-crop supplies.
- Plus, some uncertainty exists about the state of the 2013 crop. Yesterday's Crop Progress Report from USDA showed that as of Sunday, 8% of the soybean crop was still left to plant and 19% has yet to emerge.
- Heavy rain in Iowa and southern Minnesota signals little progress will be made this week.
- But USDA also reported that the overall condition of the soybean crop improved, with the "good" to "excellent" categories rising 1 percentage point last week to 65%.
Wheat futures are fractionally to 3 cents higher in most contracts at all three exchanges.
- Minneapolis wheat continues to benefit from a slow planting and emergence pace on the Northern Plains, especially in North Dakota.
- HRW wheat harvest is also lagging the average pace, but related hedge pressure is limiting buying interest to short-covering.
- Reports out of Kansas signal harvest will be in full swing in the state today. Yields are improving as combines push north. Harvest-related hedge pressure will limit buying interest in the wheat market.
- Stats Canada put all wheat seedings at 25.9 million acres, which was just slightly less than expected but up 9.3% from year-ago.
- Gulf basis for wheat slid 10 to 13 cents for summer delivery this morning, pointing to slowed demand and increased supply availability.
Live and feeder cattle futures are enjoying slight gains this morning.
- Live cattle futures are enjoying some light short-covering this morning.
- But otherwise, buying interest is limited amid uncertainty about this week's cash cattle prospects. Traders are on watch for a summer low in the cash market.
- Packers have yet to place bids this week. Last week, trade took place at mostly $120 in the Southern Plains. Futures are at a slight premium to those prices and packers are enjoying very wide profit margins.
- Showlist estimates are 7,000 head tighter in Nebraska but up slightly in Kansas and Texas, adding uncertainty.
- Meanwhile, the boxed beef market has provided limited direction as prices were choppy to start the week and movement was light. Traders are concerned demand will slow as the hottest weeks of the summer approach.
- A firmer tone in live cattle and light pressure on the corn market is also supportive of feeder cattle futures.
Lean hog futures are off to a mixed start, with nearby contracts favoring the downside.
- Cash hog bids are steady to lower today as a number of packers are well supplied and a holiday-shortened kill is ahead next week.
- But nearby contracts' discount to the cash hog index is also limiting selling interest to light profit-taking.
- Plus, the pork cutout value has risen 10 of the past 11 days and the new mandatory reported prices are nearing the all-time high from the voluntary reported pricing. However, firmer prices have slowed movement, which can be viewed as a cautionary flag.
- Product market gains have resulted in wide profit margins for packers.
- But with summer-month lean hog futures trading near their contract highs, traders are on guard for a potential market top, especially since we are now into the timeframe when the cash and product markets typically top.