Corn futures have reversed early, double-digit gains to post slight losses in all but the front-month contract.
- Corn futures are trading near record-high levels today due to heightened crop concerns, but this has encouraged some light profit-taking.
- Early highs were hit as the updated Drought Monitor shows 81% of the nation covered by drought, with 86% of the Midwest and 96.5% of the High Plains covered by drought.
- The forecast points to such conditions intensifying and spreading rather than easing.
- Weekly corn export sales 180,700 metric tons (MT) for combined marketing years, 148,800 MT of which were for 2012-13 reflect some rationing has taken place.
- Also signaling some demand destruction has occurred is weekly ethanol production data from the EIA that was the lowest since it began releasing the reports in June 2010.
Soybean futures have significantly pared early gains, but remain mostly 20-plus cents higher through the January 2013 contract. Far-deferred months are now mixed.
- August soybean futures posted an all-time high for a front-month contract on the weekly continuation chart earlier today, which has encouraged some profit-taking on concerns about how long this weather rally will last.
- But for now, the extended weather outlooks from the National Weather Service (NWS) is keeping bulls in control. Drought is expected to remain in effect with high temps across the Midwest through October.
- Overnight precip (with more expected today) has been spotty and light.
- Lofty prices have slowed export demand somewhat. Weekly soybean export sales of 135,300 MT for 2011-12 and 272,300 MT for 2012-13 fell short of expectations.
- But this is countered by a 112,000 MT daily sale to the United Kingdom for 2012-13.
Wheat futures have backed off their early highs, but they continue to enjoy double-digit gains in some contracts.
- With front-month corn and soybean contracts setting record highs, the front-month Chicago wheat contract looks like a value buy as it is still $4 below its all-time high.
- Wheat is also benefiting from evidence of increased demand for U.S. wheat thanks to lofty corn prices and wheat production concerns overseas. Weekly wheat export sales of 589,200 MT for 2012-13 topped expectations.
- The extended weather outlook signals winter wheat will be planted into dry soils in the US Central and Southern Plains.
Live cattle opened under pressure, but the market has improved to mixed trade. Feeder cattle got off to a sharply lower start, but they have improved to favor the upside in mixed trade.
- Live cattle futures are seeing profit-taking after yesterday's sharp to limit-higher close.
- Encouraging this was a $2.29 pullback in Choice boxed beef values yesterday and a 36-cent decline in Select cuts, though this encouraged strong movement of 274 loads.
- Also, the front-month contract is well above this week's $113 cash prices.
- Lighter weekly beef export sales of 15,600 MT raise concerns economic headwinds are trimming demand overseas.
- But pressure is being limited by expectations for the Cattle Inventory Report to show continued contraction of the herd and for the Cattle on Feed Report to show a slowdown in Placements for June to 98.9% of year-ago.
- As corn backed off its early gains, feeder cattle futures improved.
Lean hog futures are slightly to moderately higher in most contracts.
- The pork market is showing more evidence a near-term low has been posted, as the cutout value rose 38 cents yesterday amid decent movement.
- Tightening supplies on reduced hog weights due to recent heat is resulting in steady to higher cash hog bids today, despite negative packer profit margins.
- Recent strength in the grain market has traders scaling back their farrowing expectations, which tightens supply expectations for late this year into 2013.
- However, trade expects USDA's Cold Storage Report tomorrow to show frozen pork stocks of 590.6 million lbs. for June -- down 7% from the month prior; this would still represent the record-large supplies for that month.