Corn futures have seen choppy trade this morning and futures are currently narrowly mixed.
- A shift to a wetter weather pattern for the western Corn Belt ahead of the weekend along with dollar strength is encouraging light selling in corn.
- Plus, there has been no change in what has been a lackluster export demand story for corn. Gulf basis did improve 2 cents for April delivery this morning, however.
- Basis around the country remains historically high thanks to very tight domestic carryover. This should limit the market's downside.
Soybean futures softened on the open of pit trading to trade fractionally to 3 cents higher in old-crop futures, while new-crop futures are around 5 cents higher.
- Soybean futures are enjoying followthrough from yesterday's sharp gains, strongly suggesting near-term lows have been posted.
- Concerns about yield reductions in Argentina and the possibility of shipping delays in Brazil also remain supportive.
- The availability of South American supplies is key for easing very tight U.S. bean supplies.
- Demand for U.S. soy products has not been deterred by high prices, especially from China. A daily sale to China yesterday signals it has not yet switched to booking its needs from South America.
- Also speaking to strong crush demand in China, the country's portside bean inventories stood at 4.93 MMT yesterday, compared to 6 MMT the year prior.
Wheat futures have softened to trade mostly fractionally to 4 cents lower in Chicago.
Nearby Minneapolis and Kansas City wheat futures are slightly higher while deferred months are under light pressure.
- As reported in "First Thing Today," trade sources report China has recently booked about 350,000 MT of U.S. wheat, 400,000 MT of Australian wheat and around 100,000 MT of Canadian wheat.
- Egypt purchased 60,000 MT of U.S. SRW wheat from its overnight tender.
- The Chinese and Egyptian purchases signal U.S. wheat may finally be attracting some export demand.
- Texas state statisticians report 49% of the winter wheat crop is rated "poor" to "very poor" as of Feb. 17, which compares to 40% in these categories in late-November.
- But significant precip in the near-term forecast for the Southern and Central Plains makes it difficult for the wheat market to find buyers.
Live cattle futures got off to a mixed start, but futures have since softened to trade steady to slightly lower. Feeder cattle futures are moderately to sharply lower.
- Boxed beef prices firmed around 50 cents yesterday and movement was very impressive at 366 loads. This could signal the product market has put in a low. But traders will need multiple days of gains to solidify this idea.
- Nevertheless, futures are vulnerable to selling as nearby contracts are at least $3 above last week's $123 cash cattle trade.
- While showlist estimates are higher this week, the storm event across the Plains and frigid temps for much of the country is stressing livestock.
- Ongoing concern about demand for feeder cattle and high production costs are weighing on feeder cattle futures.
April lean hogs are slightly lower while deferred months are favoring the upside.
- Lean hog futures are enjoying light short-covering thanks to a $1.48 surge in the pork cutout value yesterday. Packers moved a strong 101 loads or pork.
- But considering the product market's struggle to put in consecutive days of gains, traders are hesitant to add long positions.
- Buying enthusiasm is also being curbed by talk China may follow Russia in requiring imports of U.S. pork to be accompanied by certification it contains no ractopamine residue starting March 1. Ractopamine use is legal in the U.S.; thus we do not test for it.
- The gain in the pork market along with recent softer cash prices has improved packer cutting margins.
- But reduced kill hours and the fact that packers have cut in the red for an extended period means they will toe the line in paying up for cash hogs. Bids are steady to lower today.
- This could change if the winter storm expected for the western Corn Belt disrupts hog transportation.
- Average hog weights for the week ended Feb. 16 declined by 0.4 pounds in southern Minnesota and Iowa.