Corn futures softened with the start of pit trading to trade 8 to 9 cents lower in old-crop futures, while new-crop is roughly 3 to 4 cents lower.
- Softer Gulf and interior basis levels for corn signal the recent rally spurred some farmer selling and likely trimmed some demand. Recent dollar strength was also a contributor to a pullback in demand.
- Adding to demand concerns, Argentina's ag ministry estimates the country will produce a record-large 26.5 MMT corn crop. This led to the government approving an additional 2 MMT of corn for export in 2012-13.
- But selling is being limited by ongoing concerns about tight corn supplies and favorable outside markets. The U.S. dollar index is under pressure and the stock market is enjoying strong gains to wrap up the week.
- Traders' focus is also beginning to shift toward next week's key Quarterly Grain Stocks and Prospective Plantings Reports.
Soybean futures have extended early losses to trade mostly double-digit lower.
- Soybean traders are booking profits ahead of the weekend after the market posted strong gains yesterday.
- The market remains uncertain about when Brazilian bean supplies will flood the market. Shipping delays have kept the U.S. bean export window open longer than usual, but yesterday's export sales tally signals it may be closing.
- Adding to demand concerns, Argentina's ag ministry forecasts 2012-13 bean production will be a near-record 51.3 MMT.
- Countering this, however, are expectations China's soy imports may slip below 4.5 MMT for April after falling to just 3.77 MMT in March due to Brazilian shipping delays. China National Grains & Oils Information Center estimates monthly crush needs at 4.8 MMT.
Wheat futures softened along with corn to trade mostly 5 to 7 cents lower in Chicago and Kansas City and 1 to 4 cents lower in Minneapolis.
- Wheat futures are seeing spillover from neighboring pits as well as concerns that recent strengthening in the U.S. dollar index has softened demand for U.S. wheat.
- The latest supply update out of Ukraine is that the UkrAgroConsult expects the country to increase its grain export forecast by 26% to 27 MMT due to expectations for a record-large crop of more than 53 MMT in 2013-14.
- A storm that is expected for the Plains this weekend is making it tough for wheat to find buyers, as this is favorable for drought relief.
Live cattle futures are posting slight to moderate losses in early trade. Feeder cattle futures are narrowly mixed.
- Traders are booking some profits ahead of the weekend and this afternoon's Cattle on Feed Report, which is expected to show all categories well below year-ago levels.
- Recent weakness in the beef and cash market is also giving bears the advantage.
- Light cash cattle trade took place at $124 to $125 this week, which is down $2 to $3 from the week prior. But traders don't seem in a hurry to narrow the premium front-month futures hold to the cash market, signaling they expect a low is near.
- Softness in the boxed beef market this week was a contributor to lower cash action. Boxed beef prices were mixed yesterday and movement was unimpressive at 167 loads.
- Persistent cold temps have limited demand for high-quality cuts of beef; thus, Choice cuts have moved to an unusual discount to Select values.
- Feeder cattle futures are benefiting from corrective short-covering and pre-report positioning.
Lean hog futures are posting slight losses across the board.
- Weakness in the cash market and ongoing concerns about pork demand is limiting gains in lean hog futures.
- While pork cutout values improved $1.09 yesterday, this slowed movement to just 34.13 loads, keeping demand concerns on traders' minds.
- While packer profit margins are positive, they are paying steady to lower cash prices today due to pork demand concerns and the fact that they are buying for a holiday-shortened week.
- Traders will also be evening positions ahead of this afternoon's Cold Storage Report, which will give the market a better idea of the state of pork demand.
- The fact that traders are extending the $2.50-plus premium April lean hogs hold to the cash hog index signals they believe a seasonal correction is due.