Corn is mostly 9 to 20 cents higher, which is slightly off earlier highs.
- Weather remains traders' focus. December corn futures have moved to a fresh contract high as traders continue to factor in crop losses.
- Traders expect this afternoon's crop condition report from USDA to reflect continued deterioration. A Reuters survey signals the portion of crop rated "good" to "excellent" will decline by 3 points to 23%.
- Both the forecast for this week and the mid-range outlook includes above-normal temps and limited rainfall chances. As a result, traders are expecting private crop estimates to continue to decline.
- Gulf corn basis is steady to weaker amid limited demand. That's further evidence the historic corn price is slowing demand.
Soybeans are now trading 29 to 37 cents higher, which is mildly off earlier highs.
- Soybean traders are building premium into the market as they react to disappointing weekend rains and forecasts calling for minimal relief from the drought.
- Traders are still looking for a price that slows soybean use. Based on recent export and domestic usage data, that price hasn't been hit yet.
- Traders are expecting another downtick in USDA's crop condition ratings this afternoon. Based on a Reuters survey, the "good" to "excellent" categories are expected to decline by 2 points to 29%.
- China halted sales of state-owned soybeans last week as stockpiles sold out. But sales are set to resume this week, with 400,000 metric tons (MT) up for auction.
Wheat has backed slightly off earlier highs, but remains solidly higher. Chicago wheat is 7 to 14 cents higher, Kansas City wheat is 9 to 12 cents higher and Minneapolis wheat is mostly 4 to 9 cents higher.
- Wheat futures continue to pull support from the corn market as corn traders are actively building premium into the market.
- Additional support is coming from crop concerns in the Black Sea region as drought is lowering production prospects there, especially in Russia, Ukraine and Kazakhstan.
- There is heightened talk Russia's government could sell some stocks from its intervention supplies to stabilize domestic prices in regions that are most affected by drought.
- A firmer U.S. dollar index has helped pull futures from earlier highs.
Live cattle futures opened with a firmer tone, but have turned mixed. Feeder cattle futures are under moderate to sharp pressure.
- Live cattle futures are trading at a big premium to the cash market, which is weighing on some contracts this morning.
- Showlists weren't cleaned up last week, meaning there will be more cattle for sale this week. That has traders looking for earlier cash trade than recent weeks. It also means packers will be reluctant to raise cash cattle bids unless boxed beef movement and prices are strong early this week.
- Feeder cattle futures are being pressured by strong gains in the corn market as traders look for a price that will slow corn use.
Lean hog futures opened with a firmer tone, but the August contract has softened while deferred months remain slightly higher.
- August lean hog futures are trading at a slight discount to the cash index, but the contract is under pressure. That suggests traders feel the cash hog market is going to face near-term pressure as producers get current on marketings.
- However, the cash hog market is steady at most locations this morning, although firmer tones are being seen in some areas. The cash strength is a little surprising as cash sources report the supply of market hogs is heavier than recent weeks.
- Cash sources are also reporting producers are culling herds amid rising feed prices. That will increase near-term supplies.