Corn futures have rallied to trade double-digit higher across the board.
- The Midwest got soaked over the weekend and more rain is in the forecast this week.
- This will keep most producers from getting the remainder of the crop planted before the calendar flips to June. USDA will provide another update on planting progress this afternoon.
- Washouts, ponding and flooding means some of the crop will need to be replanted.
- All of this points to some corn acres being switched to other crops like soybeans.
- Also, Gulf basis firmed 2 cents for immediate delivery, which is indicative of tight supplies and possibly some export demand news.
- Spillover from soybeans and some technical buying as corn is testing near-term levels of resistance are also supportive.
Soybean futures have surged 30-plus cents higher in old-crop contracts, while new-crop beans are posting gains in the 20s.
- Soybean planting delays are fully expected after heavy rain this weekend with more in store this week. This is lifting soybeans, despite the fact that delays also mean more intended corn acres will likely be switched to beans.
- Early gains triggered buy stops as the market moved through key levels of resistance. This is especially impressive considering dollar strength.
- The market is also benefiting from some fresh demand news this morning, which heightens focus on tight old-crop supplies.
- Chinese analysts signal the country's soy demand is on the rise as China is working to build its poultry sector back up after the bird flu situation earlier this year.
- Also, USDA announced a 120,000-MT soybean sale to China for 2013-14 delivery this morning.
Wheat futures are mostly 2 to 4 cents higher in Chicago and Minneapolis, while Kansas City is up 4 to 6 cents.
- Spillover from corn and soybeans are keeping wheat in positive territory, but otherwise buying interest is limited by strong gains in the U.S. dollar index.
- News China National Grain and Oils Information Center says the country purchased as much as 650,000 MT of U.S. wheat last week is seen as factored into prices.
- Some areas of the Plains are expected to receive major rain this week, but this is expected to miss the Southern Plains.
- Weekend precip is slowing spring wheat planting progress in northern locations.
- Gulf basis surged 10 to 21 cents for August and September delivery, signaling increasing concern among end-users about the HRW crop.
A number of live cattle contracts gapped higher on the open; futures are enjoying slight to moderate gains, with the exception of the front-month contract, which is slightly lower. Feeder cattle futures are mostly lower in early trade.
- On Friday, Choice boxed beef cuts slid $2.50 after surging to eight consecutive all-time highs. Select cuts fell $1.08 and movement was a very light 111 loads.
- But a pullback in beef prices has long been expected as traders view record-high prices as unsustainable.
- The market will closely monitor beef movement and prices for signs of how consumers responded to high prices over the holiday weekend. Wet weather may have led to a lackluster start to grilling season.
- Last week, cash cattle trade took place at $1 to $1.50 lower prices of $124 in the Southern Plains and $125 to $126 at northern locations.
- But nearby futures still hold a big discount to these prices.
- Strength in the grain markets are weighing on feeder cattle.
Lean hog futures are slightly higher in early trade.
- Lean hog futures are benefiting from supportive supply and demand fundamentals today.
- Supplies are tightening seasonally, which is expected to keep the cash hog market mostly steady the first part of the week, despite the fact that this is a holiday-shortened week. Some plants will operate Saturday to make up for Monday's downtime.
- Flooding in the Midwest could make supplies tougher to come by, however.
- Traders will also watch the pork market closely for signs of weekend clearance. Some are optimistic that pork's relatively cheap price tag could have caused more price-conscious consumers to favor pork over the holiday weekend.
- On Friday, the pork cutout value firmed 56 cents, but movement slowed to 257.3 loads.
- Strength in the U.S. dollar index and the premium nearby futures hold to the cash hog index are limiting buying enthusiasm.