Corn futures have softened to trade 20-plus cents lower in the December through July contracts, while far-deferred months are seeing lighter double-digit losses.
- Excitement regarding the Fed's move to stimulate the economy last Thursday has faded, leaving the market vulnerable to profit-taking with harvest actively underway.
- Traders expect this afternoon's Crop Progress Report to show harvest is 20% to 25% complete as of Sunday.
- Heavy selling in soybeans is also spilling over to corn.
- Gulf basis levels are steady to firmer this morning, however, signaling that tight supplies are holding off steep declines in the cash market. This should, in turn, limit an extended decline in futures.
Soybean futures softened with the open of pit trading to post 40- to 50-plus cent losses in most contracts, with nearby contracts leading the selloff.
- Traders are actively booking profits after strong gains last week inspired by USDA's confirmation of tight beans supplies along with the Fed launch of QE3.
- Early pressure on soybeans triggered sell stops as contracts dipped below support. Also harvest-related hedge pressure is weighing on soybean futures.
- Improved rain chances this week for Southern Brazil and Mato Grosso are adding pressure as that would improve planting conditions.
- Traders are ignoring news of a 210,000-metric-ton daily soybean sale to unknown destinations for the 2012-13 marketing year.
Wheat futures have softened to post losses in the upper 20s to low 30s in many contracts at all three locations. Nearby contracts are leading losses.
- Spillover pressure from corn and wheat have accelerated profit-taking in wheat futures.
- This is outweighing news of tightening wheat stocks in Australia and dry conditions in the U.S. Southern Plains where planting is underway.
Live cattle futures are mixed with a slight downside bias while feeder cattle futures are enjoying slight to moderate gains.
- Spillover from the grain markets is causing live cattle to favor the downside.
- Concerns are building about the sustainability of high cash cattle prices as last week's $126 to $127 trade is near record levels and packers are cutting in the red. This may encourage them to reduce kill hours.
- Traders are also watchful for resistance to high boxed beef prices. On Friday, both Choice and Select cuts rose in price, but movement slowed.
- Feeder cattle futures are benefiting from weakness in the corn market.
Lean hog futures are slightly to moderately lower this morning.
- October lean hogs are at around a $5 premium to the cash hog index, which is opening the door for some profit-taking today after last week's gains.
- But selling pressure is limited as gains in the pork cutout value late last week have raised expectations that the cash hog market will stabilize this week.
- Packers are enjoying wide profit margins and some are in need of supplies for what is expected to be another large Saturday kill. Cash hog bids are mostly steady this morning.
- Heavy selling in the corn market is also helping to limit selling interest in hog futures as traders hope it slows sow liquidation.