Corn futures are around 3 cents lower in the front-month with the rest of the market 7 to 10 cents lower.
- Traders are moving to the sidelines and reducing risk ahead of USDA's reports, which will be released at 11:00 a.m. CT.
- Pre-report expectations are also encouraging some light bull spreading. Traders look for USDA to trim planted corn acreage from its March intentions to around 95.34 million acres, but this is seen as already factored into prices.
- The market expects June 1 corn stocks at 2.856 billion bu., down from 3.148 billion bu. a year ago and the tightest stockpiles for the period since 1997.
- Today is the start of the delivery process for July corn futures; as expected, no deliveries were posted.
- Gulf corn basis is 2 cents softer for immediate delivery and 5 cents lower for August delivery, signaling softer demand and/or increased farmer selling.
- Drier weather in the near-term forecast for the western Corn Belt and rain for the eastern Belt is also viewed as positive for the crop and thus negative for futures.
Soybean futures are 2 to 11 cents lower, with new-crop futures leading the decline.
- Traders are squarely focused on reducing risk ahead of USDA's key reports today, which have produced big chart moves in the past. The market is also squaring the book for the end of June.
- Pre-report expectations are for USDA to raise its planted soybean acreage from March intentions by 898,000 acres to around 78.024 million acres. This would be up 826,000 acres from last year's seedings.
- Traders look for USDA to peg June 1 soybean stocks at 441 million bu., down from 667 million bu. a year-ago.
- As expected, no deliveries were posted against July soybean futures.
- More favorable weather for soybean development and negative outside markets are adding to the negative tone.
Wheat futures are posting losses of 4 to 8 cents in Chicago and 5 to 6 cents in Kansas City. Minneapolis wheat is mixed with a downside bias.
- Traders are readying positions for month-end and USDA's grain stocks and acreage update at 11:00 a.m. CT. Pressure on corn and soybeans is giving bears an edge.
- Traders look for USDA to peg June 1 wheat stocks at 750 million bushels.
- The market expects USDA to cut spring wheat acreage to around 12.117 million acres.
- This plus concern about the lagging development of the spring wheat crop, which will likely be confirmed in Monday's Crop Progress Report, is limiting selling in Minneapolis wheat.
- Ongoing harvest-related hedge activity continues to weigh on the Chicago and Kansas City wheat markets. July corn hit its lowest level since July 2010 today.
- Also, Japan is looking to replace U.S. western white wheat for the first time in over 50 years due to the limited discovery of GMO material in one field in Oregon. But trade sources say Japanese mills are used to handling U.S. wheat and don't want to switch.
- A forecast by a Ukrainian ag forecaster that the country's exports will hit 9.2 MMT in 2013-14, a 37% increase from the previous marketing year, is adding pressure.
Live cattle futures gapped lower on the open, but the market has since improved to post just slight losses in most contracts. Feeder cattle futures are steady to slightly lower.
- Strength in the U.S. dollar index is encouraging profit-taking after most contracts posted gains yesterday.
- Nearby contracts are at a $1-plus premium to last week's cash action, signaling a friendly bias toward this week's cash trade. The June contract expires at noon CT today.
- Showlist estimates are tighter this week, the beef market improved yesterday, packers are enjoying wide margins and heat has stressed cattle on the Southern Plains this week.
- But on the other hand, boxed beef market for the week has been choppy and packers are preparing for a holiday-shortened week.
- The cattle market has given some indications it is working on a technical low, but again, traders are exercising caution in light of past disappointments on that front.
Lean hog futures are marginally higher in the front month and slightly lower in deferred contracts amid some light bull spreading this morning.
- Strength in the U.S. dollar index is also encouraging some light profit-taking in deferred contracts after the market posted strong gains yesterday.
- Meanwhile, July hogs are seeing some light followthrough buying as they remain at a discount to the cash index.
- Buying and selling interest are also limited ahead of this afternoon's Hogs & Pigs Report, which is expected to reflect mild expansion. Traders look for All Hogs & Pigs to come in at 100.6%, Kept for Breeding at 99.9% and Kept for Marketing at 100.7% of year-ago.
- Also, there is concern about pork demand as we enter what is typically the hottest weeks of the summer. A $2.05 plunge in the pork cutout value yesterday (largely thanks to $15.11 drop in bellies) and light movement of 271.6 loads adds to such concerns.
- Early cash hog bids are mostly steady as packers are buying for a holiday shortened week. Packers are still enjoying double-digit profit margins.