Corn futures have seen choppy action this morning, but at present are down 4 to 10 cents.
- Profit-taking has picked up this morning as traders look to take advantage of yesterday's sharp gains. December corn is back below the $5.00 mark after closing above that price yesterday.
- There is also some concern about whether recently improved export demand is sustainable at higher prices.
- But high temps and dry weather in the Corn Belt this week with heat expected to linger over the 6 to 10-day outlook will limit the market's downside risk.
- Yesterday, funds made a major reduction to their net short position, but their net short position is still quite large.
- USDA yesterday lowered its corn crop condition rating to 59% "good" to "excellent," which resulted in a 6.5-point decline in Pro Farmer's weighted Crop Condition Index to 354.6 (0 to 500 point scale). More declines are likely ahead.
- Gulf basis was 1 to 5 cents lower for immediate and September delivery this morning, signaling increased farmer sales.
Soybean futures have firmed to trade mostly 3 to 5 cents higher this morning. Action has been volatile this morning.
- Soybean futures continue to see bouts of profit-taking, but bulls have the advantage in the bean market thanks to ongoing heat and dryness in the Midwest.
- The market is concerned this may cause pod abortion and cause issues with the filling soybean crop. USDA yesterday said 84% of the crop was still setting pods as of Sunday.
- In its crop condition report yesterday USDA also lowered the amount of beans rated "good" to "excellent" a bit more than expected to 58%.
- This resulted in nearly an 8-point decline in Pro Farmer's weighted Crop Condition Index to 350.75 (0 to 500 point scale). Current stressful conditions mean the market expects more declines next week.
Wheat futures are a mixed bag, with SRW wheat 1 to 3 cents lower, HRW wheat mixed with a downside bias, and HRS wheat mostly 1 to 2 cents higher.
- Spillover from the corn market is pressuring SRW and HRS wheat this morning.
- But HRS wheat is benefiting from concerns about harvest delays that are expected to persist this week due to rain in the Northern Plains.
- Recent signs of solid export demand for U.S. wheat is limiting selling pressure across the complex. But a 6- to 8-cent slide in Gulf basis for September delivery indicates yesterday's rally may have spurred some farmer sales.
- Outside markets are also providing mixed signals this morning as the U.S. dollar index is under pressure, but so is the stock market.
Live cattle futures are posting slight losses this morning, while feeder cattle are enjoying slight to moderate gains.
- Traders are booking some profits after yesterday's strong gains.
- There are also some concerns about consumer resistance to higher beef prices, as movement has recently been quite light.
- Yesterday, Choice cuts slid 39 cents while Select firmed 5 cents and just 107 loads changed hands.
- But tightening supplies, confirmed by Friday's Cattle on Feed Report, will continue to limit the market's downside risk.
- But showlist estimates are higher at all locations this week as just light trade took place last week. This along with lackluster performance in the boxed beef market could make it tough for feedlots to get higher prices for cash cattle this week.
- Feeder cattle futures are enjoying some corrective short-covering after yesterday's heavy losses. Weakness in the corn market is also supportive.
Lean hog futures are slightly higher in the front-month but slightly lower in deferred contracts.
- Lean hog futures are seeing light profit-taking after yesterday's gains.
- A disappointing start for the pork cutout market is adding incentive to do so as prices slipped and movement was light yesterday.
- The cash hog market is also steady to lower today. While packers are enjoying wide cutting margins, they are having no trouble booking supplies thus far.
- There is some concern about near-term supply tightening, however, as hot weather in the Midwest will limit weight gain and possibly hog marketing.
- Also limiting downside risk for nearby contracts is the $11-plus discount the October contract maintains to the cash hog index.