Corn futures are seeing bull spread unwinding, with old-crop contracts down 2 to 8 cents and new-crop narrowly mixed.
- New-crop corn continues to benefit from concerns about the 2013 crop. Recent rains have resulted in lowland flooding across much of the western Corn Belt and more rain is on the way this week.
- With 13.6 million acres of the corn crop left unplanted, this raises concerns about reduced yield potential on what acres are seeded as well as the likelihood some acres will be switched to other crops or claimed as prevent plant.
- Also, flooding means some of the corn crop will need to be replanted.
- Gulf basis firmed for immediate delivery the past two mornings, signaling export demand news may lie ahead. But market action indicates proof of improved export demand will be needed to spark buying interest in old-crop corn.
- Spillover from soybeans is limiting buying interest in the corn market today.
Soybean futures have softened to trade double-digit lower in old-crop contracts and roughly 4 to 7 cents lower in new-crop.
- Soybeans are being pressured by news China canceled 147,000 MT in soybean purchases for 2012-13.
- Also, Gulf soybean basis fell 5 cents for immediate delivery and 1 cent for delivery the last half of July this morning.
- Traders view this news as signs of slowing export demand.
- But pressure on new-crop beans is being limited by increasing concerns about a 17 percentage-point lag in soybean planting compared to the norm. Just 44% of the crop was planted as of Sunday, and little progress is expected this week due to soggy conditions.
- Also, just 14% of the crop is emerged, compared to 30% on average and 57% last year.
- But somewhat offsetting this are expectations soybeans will pick up some intended corn acres.
Wheat futures have rallied to trade roughly 5 to 7 cents higher in Chicago and Minneapolis and 1 to 4 cents higher in Kansas City.
- Wheat futures are enjoying some light buying interest thanks to weakness in the U.S. dollar index and ongoing declines in the condition of the winter wheat crop.
- Pro Farmer's weighted Crop Condition Index shows the HRW and SRW crops slipped by 3 points from last week. USDA rated 42% of the winter wheat crop in "poor" to "very poor" condition, compared to 41% last week.
- Plus, spring wheat planting advanced to just 79% complete, which compares to 86% complete for the five-year average. Major rain in the Northern Plains this week will further delay planting.
- SovEcon revised its 2013-14 Russian wheat crop higher to 50 MMT, with wheat exportable supplies at 13 MMT to 15 MMT.
- Australia's wheat production for 2013-14 is expected to rise 2 MMT over year-ago to 24 MMT, according to a senior industry official for the country.
Live and feeder cattle futures are enjoying light gains on followthrough buying this morning.
- Traders are working to narrow the discount live cattle futures hold to last week's cash cattle action at $124 in the Southern Plains.
- The market is also responding positively to a slight pullback in Choice boxed beef values from record-high levels and the coinciding improvement in movement.
- Yesterday, Choice boxed beef values fell 33 cents and Select fell 51 cents. This spurred movement of 191 loads.
- Showlist estimates are up from week-ago, but packers are enjoying wide profit margins, which could help feedlots to get at least steady prices for cattle.
- Weakness in the U.S. dollar index is also supportive.
Lean hog futures are enjoying slight to moderate gains this morning.
- Lean hog futures are responding positively to news the Chinese company Shuanghui International will buy Smithfield Foods, as this is expected to boost U.S. pork export opportunities.
- Meanwhile, market-ready hog supplies are tightening seasonally and average hog weights in Iowa and southern Minnesota fell 1.2 lbs. last week over the week prior. Plus, flooding in the western Corn Belt is making hogs tougher to obtain in some areas.
- But an unimpressive start for the pork market yesterday is tempering bullish enthusiasm. The pork cutout value fell 93 cents and movement was a light 297.3 loads.
- This pulled packer profit margins into the red, which is keeping cash hog bids from advancing.
- Also, June lean hogs are at roughly a $1.50 premium to the cash hog index.