Corn futures softened slightly with the open of pit trading. Futures are currently 3 to 7 cents lower, with old-crop contracts leading losses.
- After gains earlier this week, dollar strength is encouraging traders to book some profits ahead of Friday's Supply and Demand Report. Expectations are for USDA to raise its U.S. carryover estimate by around 17 million bu. to 649 million bushels.
- Corn futures are also seeing some bull spread unwinding.
- Light pressure on new-crop futures stems from recent soil moisture improvement in the Corn Belt and indications a wetter weather pattern may be emerging. The 6- to 10-day forecast calls for above-normal precip in the eastern Corn Belt and the 8- to 14-day outlook calls for above-normal precip across the upper Midwest.
- Light pressure also stems from news U.S. ethanol production slid 1% last week to 805,000 barrels per day, though ethanol stocks also fell marginally (0.1%) to 19.4 million barrels.
Soybean futures firmed with the open of pit trading to post slight gains in old-crop futures while new-crop beans are mostly slightly lower.
- Early losses were seen as a buying opportunity with the start of open-outcry trading.
- Traders expect USDA on Friday to trim carryover supplies by 3 million bu. to 122 million bushels. This is due in no small part to still-strong soy export demand, especially from China amid delays at Brazilian ports.
- The U.S. ag attache in Brazil has lowered its estimate of the country's soybean crop to 82.5 MMT and says wait times at ports have reached 50 days and could read 60 days over the "next few months."
- Pre-report expectations are that USDA on Friday will leave its Brazil bean production estimate little changed from last month.
- Recent Corn Belt precip continues to limit buying interest in new-crop beans as this reduces concerns drought will linger.
Wheat futures at all three locations continue to post losses around 3 to 6 cents in most contracts.
- Spillover from corn and strong gains in the U.S. dollar index are encouraging profit-taking in the wheat market.
- Recent precip in the Plains is also weighing on the wheat market.
- Adding to the negative tone is news a ministerial panel in India will discuss a proposal for allowing an additional 5 MMT of wheat exports tomorrow.
- In addition, Ukraine officials will meet to discuss lifting the wheat export ban in April. The country's ag minister says the country has exported 6.2 MMT of wheat this marketing year and will likely export another 500,000 MT before 2012-13 is complete.
Live and feeder cattle futures gapped lower on the open and are posting moderate to sharp losses this morning.
- Live cattle futures are facing followthrough technical pressure after the market posted bearish reversals yesterday.
- While boxed beef prices were sharply higher yesterday, movement was again lackluster, meaning concerns about beef demand remain in effect.
- This has improved packer profit margins notably from deep-in-the-red levels.
- Today's sharp losses in futures have reportedly encouraged some feedlots in Texas to move cattle at $128, steady with last week and in line with the April contract. Earlier in the week, most had expected firmer cash cattle trade.
- Dollar strength and spillover from live cattle and lean hogs is encouraging profit-taking in the feeder cattle market.
Lean hog futures are moderately lower in early trade.
- Weakness in the cash hog market as well as the product market continue to weigh on lean hog futures. Dollar strength is also giving bears the advantage.
- The pork cutout value slid $1.79 yesterday, though this did encourage strong movement.
- This has cut into packer profit margins and most packers are thought to be well supplied for near-term needs. Thus, cash hog bids are steady to lower today.
- But average hog weights declined marginally in Iowa and Southern Minnesota for the week ended March 2, limiting pressure.
- Also limiting selling interest is the fact that nearby futures are at just a slight premium to the cash hog index.