Corn futures are narrowly mixed after earlier favoring the upside.
- Light short-covering is lifting the corn market, though buying interest is limited.
- Light support also stems from USDA's announcement Japan purchased 105,664 MT of U.S. corn for 2014-15 delivery.
- The market is also benefiting from news the head of China's top ag policy-setting office says he expects China will likely import more corn to meet rising demand.
- But outside of short-covering, buying interest is limited as soybeans have turned lower.
- Gulf basis is steady this morning, signaling supply and demand are well balanced.
Soybean futures are 3 to 7 cents lower in old-crop futures, while new-crop is steady to slightly higher amid some spreading activity.
- Old-crop futures continue to face pressure from recent rains in Argentina that again stirred concerns about China potentially canceling its orders of U.S. soybeans.
- While China has taken shipment on 18.8 MMT of U.S. beans for 2013-14, the country still has 8 MMT of outstanding sales on the books.
- However, South American supplies will not come available until late February/early March if there are no harvest or logistic problems.
- But somewhat countering such concerns is a statement from the head of China's top ag policy-setting office that the country will likely import more soybeans ahead.
- Also, China National Grain and Oils Information Center (CNGOIC) says the country will likely import 5.35 MMT of soybeans in January. This compares to the ministry of commerce's forecast for 4.61 MMT in imports.
SRW wheat futures are slightly lower, while HRW and HRS wheat are fractionally to 3 cents higher this morning.
- Wheat futures have seen some corrective short-covering at times after nearby SRW contracts failed to penetrate contract-low support yesterday.
- There is also a bit of concern about the impact of an arctic blast on northern winter wheat areas. However, this is expected to remain north of areas where the winter wheat crop is most exposed to the elements.
- While the market has recently consolidated thanks to signs U.S. wheat prices may finally be attracting some value buying among exporters, consistent, strong demand news will be needed to spur active buying. This is absent.
- Traders are also working to correct the oversold condition of the wheat market.
Live cattle futures are posting slight losses in all but the February and April contracts, which are marginally higher. Feeder cattle futures are slightly lower.
- Cattle futures are facing light profit-taking pressure today after the market enjoyed gains to start the week.
- Futures are still at a discount to last week's $142 cash cattle trade in the Southern Plains, signaling traders remain skeptical feedlots will again pay up for supplies, despite the ongoing boxed beef market surge. Traders are also concerned that consumers will resist record-high beef prices.
- While feedlots are enjoying wide profit margins for the first time in an extended period, showlist estimates are up this week. However, frigid Midwest temps are stressing cattle in northern locations.
- Yesterday, Choice boxed beef values surged $3.16 and Select jumped $2.70 to yet another set of record-high prices. But movement has slowed to just under 100 loads the past two days. Last week, movement averaged 115 loads.
- Light pressure also stems from efforts to correct the technically overbought condition of the market, according to both the 9- and 14-day Relative Strength Index.
- Traders are also readying for the Cold Storage Report, which is expected to show frozen beef stocks at the end of December around 451.4 million lbs., which would be up slightly from the month prior but down from year-ago levels.
Lean hog futures are slightly to moderately lower this morning.
- The pork cutout value slipped another 83 cents yesterday and movement was lackluster at 353.56 loads. This is disappointing, considering hopes the red-hot boxed beef surge would lift the pork market as well.
- Light pressure also stems from still-expanding supplies. Average hog weights in Iowa and southern Minnesota rose 1.1 lbs. the week ended Jan. 18 and the head count estimate surged 25,000 head from week-ago.
- And while road conditions in some areas of the Midwest are less than ideal, the cash hog market is expected to be mostly steady today. Many have already secured this week's needs and three consecutive weeks of reduced kill schedules (due to weather and holidays) means supplies are ample.
- Light pressure also stems from the wide premium the front-month contract maintains to the cash hog index, which has trended lower of late.
- Traders are also readying for this afternoon's Cold Storage Report. Pre-report expectations are for frozen pork stocks to come in around 548.2 million lbs., which would be up slightly from November, but down from year-ago.