Corn futures have moved off early lows, but old-crop futures are still 2 to 5 cents lower, while new-crop is roughly 10 to 13 cents lower.
- Action in new-crop futures signals traders expect the majority of 2013 intended corn acres to be planted thanks to forecasts for warmer and drier conditions from private weather watchers next week. The National Weather Service 6- to 10-day forecast does call for above-normal precip for areas of the northern and eastern Corn Belt, however.
- Traders are thus brushing off USDA's crop progress update yesterday that showed planting at just 4% complete, compared to the five-year average of 16% complete.
- Outside markets are also adding pressure as strength in the U.S. dollar index is a limiting factor for U.S. exports.
- Steady Gulf basis levels so far this week signals fresh export demand news is lacking.
- New-crop corn futures also traded through key support levels at the April lows today, triggering some technical selling.
Soybean futures are posting losses of 7 to 12 cents in all but the front-month contract, which is firmer.
- The May contract is benefiting from concerns about tight old-crop supplies. An 11-cent surge in Gulf basis for early May delivery signals still solid demand for a small supply of U.S. beans.
- But the rest of the market is being pressured by expectations South American supplies will eventually ease the strain of tight old-crop supplies and for a rebound in 2013 production in the United States.
- Most expect bean plantings to come in above USDA's March Prospective Plantings Report. Plus, the crop will be planted into soils that have been replenished by recent, heavy precip.
- There are also concerns that a slowdown in China's economic growth could limit the country's export demand going forward. Its HSBC flash purchasing managers' index declined in April and the bird flu situation is expected to drag down the country's yearly economic growth.
- The market is ignoring USDA's announcement of a 392,000-MT soybean sale to China for the 2013-14 marketing year.
Chicago wheat futures are posting losses of 5 to 7 cents in most contracts, while Kansas City is roughly 3 to 6 cents lower and Minneapolis is mostly 2 to 7 cents lower.
- Spillover from corn and strength in the U.S. dollar index are giving bears the advantage in the wheat market today.
- But selling interest in Minneapolis is being limited by a very slow start to spring wheat planting. Just 7% of the crop has been seeded, compared to 52% last year and 24% on average.
- Traders are paying little attention to yesterday's crop condition report that showed further deterioration in the HRW crop.
- The Pro Farmer weighted Crop Condition Index shows the HRW wheat crop declined by nearly 8 points last week to 264 on a 0 to 500 (excellent) point scale.
- Also weighing on wheat futures this morning is news that Ukraine appears ready to lift its ban on wheat exports for the remainder of 2012-13, though the country is not likely to be an active exporter of wheat.
Live cattle futures gapped higher on the open and are enjoying slight to moderate gains. Feeder cattle futures also gapped to the upside on the open and are sharply higher.
- Traders are actively covering short positions, encouraged by softer corn prices and ideas the downside has been overdone.
- Yesterday's Cold Storage Report is limiting bullish enthusiasm as it reflected a 4.7% increase in frozen beef stocks as of March 31 from the month prior to a monthly record of 513.243 million pounds. This was up 17.4% from the five-year average.
- But recent beef action has given some indications the market may be working on a seasonal low. Yesterday, Choice and Select cuts firmed, though movement was unimpressive at 164 loads.
- Showlists are up in all locations except Texas, where supplies are steady with last week. This plus negative packer profit margins could make it tough for feedlots to get firmer prices compared to last week's mostly $126 to $127 trade.
- Strength in the corn market and short-covering after a move to new contract lows yesterday is encouraging strong gains in feeder cattle futures today.
Lean hog futures also staged an upside gap on the open and are higher in early trade.
- Ideas the downside has been overdone and spillover support from live cattle is supporting lean hogs today.
- Improvement in the pork market this week is seen as overshadowing a bearish Cold Storage Report from USDA yesterday.
- The pork cutout value firmed $1.45 yesterday on solid movement of 329.9 loads. This adds to ideas a seasonal rally is underway. A more favorable forecast for grilling adds to such ideas.
- Pork strength has kept packer profit margins solidly in the black. This plus tightening market-ready supplies are translating to mostly steady cash hog bids, with some scattered firmer bids noted.
- Gains in the May lean hog contract are being limited by the nearly $7 premium it holds to the cash index.