Corn futures are trading narrowly mixed.
- Ideas the downside has been overdone returned light short-covering to the corn market early, but that buying interest is light and drying up. Speculators had built their net short position to a record level the week ended Oct. 8.
- USDA progress data yesterday showed harvest advanced more rapidly than thought to 59% complete, which is just 3 percentage points behind the five-year average pace.
- But rain and snow are moving into Corn Belt today and are expected to slow harvest activity the rest of the week.
- Light support also comes from news the China National Grain and Oils Information Center expects the country to import 5 MMT of corn from all sources in 2013. The think-tank says 100,000 MT of U.S. corn is arriving this month, with another 800,000 MT expected to be delivered in November.
- Also signaling more export demand news may be ahead is a 3-cent jump in Gulf basis for immediate delivery.
Soybean futures have firmed to post gains of 2 to 5 cents.
- Corrective short-covering is lifting the bean market today.
- USDA yesterday confirmed that soybean harvest is moving into its final stages as harvest was 77% complete as of Sunday. Rain and snow are expected to slow fieldwork this week, however.
- News a top Archer Daniels Midland Co. (ADM) official does not expect the porcine epidemic diarrhea virus (PEDV) to have a major impact on soymeal demand is also providing light support.
- But buying interest is being limited by softer Gulf basis levels today, which signals the availability of new supplies. Basis dipped 10 cents for immediate delivery while basis was 1 to 4 cents lower for other delivery periods.
SRW wheat futures continue to post slight losses, while HRW wheat is mixed and HRS wheat is marginally higher.
- Strength in the U.S. dollar index is pressuring the SRW market today. Nearby contracts are testing support at the bottom of the October consolidation range. But a decline in the condition of the HRW wheat crop is lifting that market today.
- USDA yesterday lowered its "good" to "excellent" rating for the winter wheat crop by 4 percentage points to 61%. Once USDA's crop condition ratings were plugged into our weighted Crop Condition Index, it shows the condition of the SRW crop improved slightly to 377, while the HRW crop dropped 8 points to 360 (0 to 500 point scale; 500 represents an excellent crop).
- There are also lingering concerns that export demand for U.S. wheat has slowed. Thursday's export sales data for Oct. 4-24 will provide a better read on this. Sharp losses in the U.S. dollar index during that period could have brought exporters back to the table.
Live cattle futures are off to a choppy start, while feeder cattle are posting slight to moderate losses.
- Live cattle futures are seeing both light followthrough buying and profit-taking today as traders sort through varied fundamental data.
- While the surge in boxed beef values continues (Choice and Select cuts each rose more than $2 yesterday), this has notably slowed movement. Yesterday, just 116 loads changed hands.
- Packers continue to deal with negative cutting margins, though these have improved. Showlist estimates are up slightly from last week at all locations.
- Traders are also preparing for Thursday's Cattle on Feed Report (delayed due to the government shutdown), which is expected to remind of tight supplies. On Feed as of Oct. 1 is expected to come in around 92.58% of year-ago levels, while Placements and Marketings are seen at 100.67% and 104.31% of year-ago levels, respectively.
- News Taiwan has detected the feed additive zilpaterol in U.S. beef -- the third such finding in less than a month in Asia -- raises concern about its impact on export demand. Taiwan has a zero-tolerance policy for such feed additives.
- Feeder cattle futures are facing profit-taking pressure as the market pulls back from its recent highs.
Lean hog futures are posting slight to moderate losses.
- The lean hog market posted strong gains yesterday, and thus are seeing profit-taking today as traders take advantage of the recent price runup.
- Adding incentive to do so is the fact that nearby contracts are overbought according to the Relative Strength Index and at a premium to the cash hog index.
- But countering this is a 68-cent gain in the pork cutout value yesterday, though movement was light at 281.07 loads.
- Packers are planning a light Saturday kill, which is resulting in steady to lower cash hog bids. Packers continue to enjoy strong margins.
- USDA's monthly pork trade data indicates total pork exports for August of 403.594 million pounds. This is down slightly from the month prior and nearly 16 million lbs. below year-ago.