Corn futures firmed with the open of pit trading, but the market has since settled back into mixed trade with nearbys slightly higher.
- A sharply lower U.S. dollar index is encouraging short-covering ahead of the release of multiple USDA reports tomorrow.
- Traders expect USDA to trim its corn production estimate by nearly 100 million bu. from its last estimate to 10.626 billion bushels.
- But USDA is also expected to increase its 2012-13 carryover estimate by 20 million bu. to 667 million bushels.
- Also reminding the market of demand destruction were highly disappointing weekly corn export sales of 12,600 MT for 2012-13 that were nearly offset by a net sales reduction of 11,600 MT for 2013-14.
- Gulf basis was down a penny for February delivery, up 2 cents for April delivery and steady for other months this morning.
Soybean futures extended gains with the open of pit trading, but this quickly gave way to profit-taking. Futures are now under slight pressure in all but the front-month contract.
- Soybean futures received a boost from a number of daily soybean sales announcements from USDA this morning that may signal prices have dropped far enough to attract value buying.
- Daily sales included 180,000 MT to China (60,000 MT for 2012-13 and the remainder for 2013-14 shipment). China also bought 126,000 MT in optional origin sales for 2013-14; unknown destinations bought 281,500 MT for unknown destinations for 2012-13 delivery.
- Also, weekly soybean export sales of 321,800 MT for 2012-13 and 85,000 MT for 2013-14 came in above expectations, though it should be noted that expectations were relatively light.
- Positive outside markets are limiting pressure on soybean futures, as traders digest news China's trade surplus came in well above expectations of $31.6 billion in December and a rise in U.S. jobless claims last week.
- Soybeans are also benefiting from Chinese official customs data that show record soybean imports in 2012 of 58.38 MMT, up 11.2% from last year. The data also showed December imports of 5.89 MMT, which represent a 9% increase from year-ago levels.
Wheat futures have improved to post gains around 2 to 6 cents in most contracts at all three locations. Chicago wheat futures are the upside leader.
- Sharp weakness in the U.S. dollar index is lifting crude oil and gold futures, which is supportive for grain futures this morning.
- Wheat futures are also benefiting from news that Egypt's recent buy of 115,000 MT of wheat included 55,000 MT of U.S. SRW wheat. It also bought 60,000 MT from Canada.
- This sparks hopes that U.S. wheat has finally reached levels that make it competitive on the global wheat export market, though traders will need "proof" of this via more export news to actively add long positions.
- Traders are also working to ready positions for USDA reports tomorrow at 11 a.m. CT. Traders expect USDA to trim carryover from last month.
- But buying is being limited by a disappointing weekly wheat sales tally of 233,700 MT.
Live cattle futures are off to a choppy start with most contracts favoring the upside. Feeder cattle futures are under light pressure.
- So far, just light cash cattle sales have taken place in the Southern Plains at prices steady with week ago. Trade is expected to take place at similar levels when it gets underway in earnest.
- Packers are cutting in the red and showlist estimates are heavier this week.
- And while boxed beef movement has remained strong this week, prices have been choppy. Yesterday, Choice cuts slid 43 cents, while Select cuts rose 22 cents.
- But futures are benefiting from some light short-covering amid ideas heavy losses were overdone yesterday. A sharply lower U.S. dollar index is also encouraging of this.
- But that is the extent of buying interest as futures remain at a hefty premium to last week's mostly $128 cash trade.
- Feeder cattle futures are seeing light followthrough selling.
Lean hog futures are steady to slightly higher in early trade.
- Lean hog futures are benefiting from corrective short-covering after heavy losses yesterday. Friendly outside markets are also encouraging this.
- A report from Interfax today indicated Russia will bar pork shipments from one U.S. plant and two Canadian plants due to its finding of Ractopamine in pork shipments. The country began testing for the compound after the U.S. passed a trade bill that included a controversial human rights measure last month. This may have contributed to pressure on hogs yesterday.
- But today, selling interest is being limited by the fact that futures are now trading in line with the cash hog index.
- Also, while the pork cutout value slid 7 cents yesterday, movement was solid at 123.08 loads.
- Cash hog bids are mostly steady to lower today as packers are generally well supplied for the week.