Corn has seen two-sided trade this morning and is currently favoring the downside.
- Yesterday's crop condition ratings from USDA reflected continued deterioration to the U.S. corn crop. Half of the U.S. Corn crop is now rated "poor" to "very poor," which is the highest rating for the bottom two categories since 53% on Aug. 21, 1988.
- This has traders expecting big cuts in USDA's Crop Production Report Friday, but today's action signals this is already accounted for in prices.
- Buying interest is also being limited by signs of demand destruction, such as this morning's softer Gulf basis levels for all delivery months and a South Korean feedmaker's decision to pass on a tender to import corn -- the second time in under two weeks it has done so.
Soybeans have softened to trade just slightly higher in August through November contracts while far-deferred months are mostly lower.
- Soybeans have enjoyed light, corrective short-covering on ideas the downside was overdone yesterday, but early gains encouraged some profit-taking.
- Yesterday, USDA left its soybean condition rating unchanged for the top two categories but it upped the percentage of beans rated "poor" to "very poor" by 1 percentage point each to 39% combined, which marked a record high for these categories.
- With 71% of the crop setting pods as of Aug. 5, rains this week are key. The best precip chances this week are for the northern and eastern Corn Belt; the Central Belt is expected to see only light, scattered showers.
Wheat futures have softened to post losses of mostly 3 to 7 cents at all locations.
- Wheat is again taking its cue from the corn market today.
- SovEcon says it sees Russia's wheat exports falling to 8.5 million metric tons (MMT) in 2012-13 from 21.6 MMT in 2011-12. It also expects the government to use intervention stocks instead of export curbs or tariffs to control prices.
- On the other hand, a South Korean feed miller's decision to buy feed wheat from India emphasizes global feedmarkers are still searching for the lowest priced option.
- USDA says as of Sunday, 47% of the spring wheat crop has been harvested. This signals harvest pressure will soon ease.
Live cattle futures have improved from a narrowly mixed open to favor the upside. Feeder cattle futures are firming after a mostly lower start.
- Initial cash cattle signs point to at least steady prices compared to last week's $118 trade; showlist estimates are down from week ago and the boxed beef market got off to a strong start yesterday. But futures are at a premium to last week's prices, limiting buying interest.
- Outside markets are supporting cattle futures as traders are optimistic the European Central Bank will soon take action to address the euro-zone's fiscal troubles. The dollar is under pressure while the stock market is enjoying gains.
- A softer tone in corn futures is supporting mild short-covering in feeder cattle futures.
Lean hog futures are posting slight to sharp gains this morning with nearby contracts leading to the upside move.
- Lean hog futures are benefiting from short-covering on ideas the downside has been overdone, especially considering positive packer profit margins and signs the pork market may have put in a near-term low.
- Yesterday, the pork cutout value rose $1.10, though movement was light at 38.63 loads.
- Supplies are building seasonally, plus recent heat and high feed prices have encouraged producers to market hogs more aggressively. Cash hog bids are mostly steady with scattered weaker bids today.
- China's government is stockpiling frozen pork in an effort to stem the fall in domestic pork prices. It has also encouraged producers to reduce hog production.