Corn futures have softened to narrowly mixed trade with the start of pit trading.
- Corn futures have seen both light followthrough buying and light profit-taking this morning as traders weigh spillover support from wheat and soybeans and weakness in the U.S. dollar index against recent beneficial precip in the Midwest.
- Strength yesterday stemmed from improvement in both Gulf and country basis levels, which points to improved demand and/or tight supplies.
- Weekly ethanol production rose 1.9% last week to 812,000 barrels per day, slightly trimming ethanol stockpiles to 19.4 million barrels.
- March corn and March Chicago wheat futures came near in line with one another yesterday, but traders are working to widen wheat's premium to corn today, which reduces the likelihood producers will substitute wheat for corn in feed rations.
Soybean futures softened notably with the open of pit trading to trade 2 cents higher through the July contract and 1 to 6 cents lower in deferred months.
- Soybean futures initially benefited from USDA's announcement that China purchased 120,000 MT of U.S. soybeans for 2013-14 and an unknown destination purchased 120,000 MT of soybeans for 2012-13. This signals importers cannot wait for South America to sort out its shipping issues.
- But this has since given way to profit-taking as traders do expect buying of U.S. beans to slow when South American supplies hit the market, which is expected to occur soon.
- Recent snow in the Corn Belt is also encouraging light profit-taking as it improves production prospects in the U.S. for 2013-14.
Wheat futures are again the upside leader, though futures have harnessed early gains. Most contracts are around 3 to 6 cents higher.
- Wheat traders are working to widen the premium Chicago wheat futures hold to corn prices.
- Plus, dollar weakness is encouraging some light short-covering on ideas the downside has been overdone recently.
- Support also comes from news Russia's ag ministry says it plans to start buying grain from producers in August or September to replenish its intervention stocks. And the head of Russia's grain production lobby says market grain supplies will remain tight through 2013-14.
- Egypt has signaled it has 2.3 MMT of wheat in strategic reserves, which is enough supplies to last through May. Despite questions about its financial and political state, Egyptian officials say the government has priority financing for wheat imports.
- Recent precip in the Southern and Central Plains is limiting gains in wheat.
Live cattle futures are enjoying slight to moderate gains in most contracts.
- Live cattle futures are benefiting from a surge in boxed beef prices yesterday, but relatively lighter movement this week has the market skeptical as to whether the product market has put in a low.
- This plus tighter showlist estimates could give feedlots an advantage in cash cattle negotiations, especially considering the recent animal-stressing winter storm event and the fact that some slaughter operations are just getting back to operating today.
- While packer profit margins remain in the red, they have improved notably of late.
- But futures are already more than $3 above last week's cash cattle trade, limiting upside potential.
Lean hog futures got off to a slightly firmer start, but they have since softened to post slight losses.
- Lean hog futures initially enjoyed light, corrective short-covering as traders worked to correct the oversold condition of the market. But this gave way to profit-taking.
- The cash hog market continues to sputter and the pork cutout value declined another 26 cents yesterday. Movement did improve, however, to 75.25 loads.
- Cash hog bids are steady to lower again today as packers are generally well supplied for the week, minimizing the impact of the transportation disrupting storm.
- Plus, average hog weights continue to rise in the main production areas of southern Minnesota and Iowa. For the week ended Feb. 23, average hog weights rose 0.9 lb. to 276.2 pounds.
- Also limiting upside potential is the fact that the front-month contract is trading near in line with the cash hog index.