Corn futures have softened a touch to trade fractionally to 4 cents higher.
- Corn futures are benefiting from corrective short-covering amid ideas the downside was overdone yesterday. A weaker U.S. dollar index is also encouraging of this.
- Steady to firmer Gulf basis today reminds traders of tight supplies and is also supportive
- But buying interest is also being limited by signs high U.S. prices are encouraging end-users to seek cheaper alternatives.
- Today Japan purchased 250,000 MT of corn from Ukraine and livestock and poultry producers in the southeast U.S. recently bought 1.35 MMT of corn from South America.
- Plus, China is expected to be less of an importer in 2012-13. The China National Grain and Oils Information Center (CNGOIC) now forecasts its 2012 corn crop at a record 201 MMT, marking the second consecutive year of record production.
Soybean futures firmed with the open of pit trading to post gains in the upper teens in most contracts.
- Improved risk appetite and dollar weakness have encouraged commodity buying and short-covering in the soybean market today.
- Also encouraging traders to buy are signs current prices are not rationing use. Yesterday's export inspections tally and today's daily soybean sale of 110,150 MT to unknown destinations for 2012-13 are the latest examples of this.
- CNGOIC lowered its 2012 soybean production estimate from 13 MMT to 12.8 MMT, upping the likelihood China will remain a major importer of U.S. beans.
Wheat futures have eased slightly, but continue to post gains at all three locations.
- Light profit-taking has pulled corn off its earlier highs, encouraging similar action in wheat.
- Yesterday's progress report showed winter wheat planting is on track with the five-year average, but emergence lags the normal pace by six percentage points.
- Improved moisture in the U.S. Southern Plains is expected to give the crops a boost this week, though the northwest half of the Plains remains worrisomely dry.
- Ukraine's ag ministry says its grain stocks are down sharply from last year to 19.4 MMT as of Oct. 1, but Ukraine's grain exports from July 1 to Oct. 15 totaled 6.64 MMT, an increase of 73% from last year. The ministry forecasts grain exports around 20 MMT.
- Tightening supplies from the Black Sea region should give U.S. wheat a boost on the export market -- eventually. Dry weather in Australia adds to such ideas.
Live cattle futures gapped higher on the open and are enjoying slight to sharp gains. Feeder cattle futures are posting slight to moderate gains.
- A strong start in the boxed beef market yesterday and tighter showlist estimates have eased concerns that the the cash market may be working on a top.
- Plus, outside markets are much more supportive of commodity buying today, thanks to strong earnings reports.
- Traders are also keeping the tightening supply picture in mind as they ready positions for Friday's Cattle on Feed Report.
- Feeder cattle are benefiting from short-covering on spillover support from live cattle.
Lean hog futures are narrowly mixed this morning.
- Traders continue to be watchful of a top in the pork product market, which would in turn point to a pullback in the cash hog market as supplies are expanding seasonally.
- Yesterday, the pork cutout value rose 83 cents but movement slowed to 38 loads.
- This improved packer profit margins, encouraging packers to keep cash hog bids mostly steady today, despite plentiful supplies.
- Pressure on the front-month contract is also being limited by the discount it holds to the cash hog index, which is up 34 cents to $82.98.