Corn futures had moved to slight gains, but a sharp extension of losses in soybean is now causing corn to mildly favor the downside.
- Corn futures tried to work higher on long soybean/short corn spread unwinding. While that spreading action continues, the sharp extension of losses in the soybean market has caused corn futures to turn weaker.
- Rains are too late to help the vast majority of the corn crop, which has been stressed by recent extreme heat and dryness. Still, a cooler and wetter forecast is psychologically negative for the corn market.
- Plus, the corn market is lacking a fresh wave of demand news that's needed to signal to traders that prices have dropped far enough.
- As a result, any buying will be corrective in nature.
Soybean futures are 20- to 30-plus cents lower through the July 2014 contract. Far-deferred contracts are posting lesser losses.
- Soybean futures are under pressure from the weather as temps cooled and rains fell across some of the Corn Belt over the weekend. Moderate temps and additional rainfall chances are in the forecast for this week.
- While the rains will be too late to help soybeans that are shutting down, they will be beneficial for late-developing beans.
- Soybean/corn spread unwinding is weighing on the market. The November soybean/December corn spread had moved to a wide 3:1 ratio last week, which is helping encourage the spread unwinding.
- Technical-based selling is also a factor this morning as futures gapped lower at the start of the overnight session and have sharply extended those losses.
All wheat flavors are trading slightly higher this morning.
- Wheat futures are being supported by corrective buying this morning as traders cover short positions.
- Adding to the firmer tone is weakness in the U.S. dollar index, which is helping encourage traders to cover short positions.
- Rains forecast for dry areas of the Plains will likely limit the upside to mild corrective buying. While dryness is ongoing in the Plains, recent rains have improved soil moisture conditions to the best they have been in years.
- Sharp pressure on soybean futures and a mildly weaker tone in corn is also limiting buying interest in wheat this morning.
Live cattle futures have a slight upside bias. Feeder cattle futures are mixed this morning.
- Traders have bullish cash cattle hopes to start the week after cash cattle trade was better than expected at $123 in the Plains last week.
- This is mildly supporting October live cattle futures, but with the contract at a $2-plus premium to the cash market, buying interest is limited.
- To encourage packers to raise cash bids and to spark buying interest in futures, the boxed beef market likely needs to show strength.
- Feeder cattle futures are also choppy this morning as limited direction is coming from live cattle futures and the corn market.
Lean hog futures are steady to firmer this morning.
- Lean hog futures are being supported by strength in the cash hog market. Traders are looking to narrow the discount October hogs hold to the cash market.
- Cash hog bids are steady to $1 higher across the Midwest as packers work to secure slaughter supplies. But the cash strength could be short-lived if the pork product market doesn't keep pace as cutting margins are tight, with some cutting in the red.
- Seasonally, the cash hog and pork product markets should be feeling pressure as supplies build. But hog slaughter last week was down 10.5% from year-ago. That's partly due to recent extreme heat, which has slowed hog weight gains.
- The pork cutout value was $1.18 higher Friday on solid movement of 303.2 loads.