Corn futures softened with the open of pit trading to post losses of 1 to 6 cents in most contracts.
- A disappointing weekly export sales tally of 142,300 MT reminds the market that demand destruction has occurred amid lofty corn prices.
- But this is countered by recognition of tight supplies. This will continue to keep a floor under prices.
- Emphasizing this, the International Grain Council (IGC) trimmed its estimate of global 2012-13 corn carryover by 1 MMT to 117 MMT. IGC also cut its 2012-13 output forecast by 3 MMT to 830 MMT.
- Dollar strength is adding light pressure as it makes U.S. corn even less attractive globally.
Soybean futures are mixed with November through July contracts fractionally to 7 cents lower and far-deferred months slightly firmer.
- While this morning's weekly export sales tally of 522,200 MT for 2012-13 was below expectations, it still represents solid demand. The pace of total export commitments improved to 37% ahead of year-ago. USDA projects exports will decline 7% this year.
- Light pressure also stems from news IGC raised its estimate of 2012-13 global soybean carryover by 5 MMT to 27 MMT, which is 3 MMT more than 2011-12.
- This morning, USDA's announced unknown destinations bought 120,000 MT of beans, also signaling strong demand.
- Confirming this, Gulf basis levels rose 1 to 3 cents for 2012 delivery this morning. Gulf basis levels for 2013 delivery were steady to 4 cents higher.
- Also limiting pressure is news Chinese demand at state reserve auctions has slowed dramatically now that prices are in-line with those of imported beans.
Wheat futures have softened to favor the downside in choppy trade at all three exchanges.
- Profit-taking is weighing on wheat futures after recent gains.
- Wheat futures are struggling to find buying interest despite this morning's weekly export sales of 572,000 MT, which topped expectations and gave traders hope tighter global stocks are boosting export demand for U.S. wheat.
- Also, IGC trimmed its estimate of global 2012-13 wheat carryover by 3 MMT to 172 MMT. This is a 24-MMT decline from year-ago.
- Dryness concerns persist in the U.S. Southern Plains as drought remains in effect. Meanwhile, cold and dryness in northern regions have hindered winter wheat development.
Live and feeder cattle futures are posting slight losses across the board this morning.
- Traders are engaging in light profit-taking as they wait for cash cattle trade to begin. Yesterday, a few sales took place in Kansas in the dressed market at $202 -- steady with the week prior.
- Expectations are for cash trade to take place $1 to $2 above last week's $127 to $127.50 trade in the Plains.
- The market is hesitant to add risk as Choice boxed beef values rose to an all-time high of $199.38 yesterday. Though movement showed no sign of resistance to high prices, traders are not convinced such prices are sustainable.
- This morning's weekly export sales report is also limiting losses. Beef sales of 16,800 MT were up over last week and signal beef demand remains strong in the face of lofty prices.
Lean hog futures are posting slight to moderate losses this morning.
- Traders are growing more confident a near-term top is in place as the pork cutout value plunged $1.99 yesterday and this failed to encourage strong movement.
- This drop pulled packers' cutting margins into the red. This is expected to translate to weaker cash hog bids today, though early bids are mostly steady.
- Outside markets are a mixed bag. While a firmer U.S. dollar makes U.S. meat exports less attractive, gains in the stock market and crude oil futures signals risk appetite is on the rise.