Corn futures softened with the open of pit trading to post losses in the teens in all but far-deferred contracts.
- Europe is grabbing headlines today as Spaniards are rioting in opposition to austerity measures. The resulting strength in the U.S. dollar index and aversion to risk are encouraging selling in commodities.
- Plus, combines are actively rolling, making supplies more readily available.
- Traders also feel Friday's Quarterly Grain Stocks Report could provide a bearish surprise. Pre-report expectations are for USDA to peg 2011-12 grain stocks at 1.126 billion bu., which we feel is too low.
- Steady to firmer Gulf basis levels this morning, as has been the recent trend, signal the market is readily absorbing new-crop supplies as they hit the market.
Soybean futures extended the downside move with the open of pit trade to post losses in the teens to 30s, with nearby contracts leading losses.
- Early pressure on soybeans due to profit-taking on strength in the U.S. dollar index triggered sell stops and escalated losses as the market moved through key support levels.
- Rains in key areas of Brazil are also adding to price pressure as they improve planting and early development prospects.
- Harvest pressure is also weighing on the market.
- Traders are ignoring news of a 140,000-metric-ton (MT) sale of soybeans to an unknown destination for 2012-13.
- This, plus firmer Gulf basis levels for immediate delivery signal some end-users are taking advantage of the price break by covering their near-term needs.
Wheat futures have softened to post double-digit losses at all three locations.
- Negative outside markets due to heightened euro-zone economic concerns have led to broad commodity selling.
- Adding to weakness are beneficial rains in areas of Australia's wheat belt, as well as forecasts for rains across U.S. winter wheat areas that will benefit the newly planted winter wheat crop and encouraging more planting.
- Also, news Egypt's state-owned buyer bought a total of 300,000 metric tons of milling wheat from France and Romania for December delivery reminds the market U.S. wheat is not competitively priced.
Live cattle futures are favoring the downside in mixed trade. Feeder cattle futures have improved to post slight gains.
- The cattle complex initially saw some light, corrective short-covering this morning after yesterday's fund-driven price plunge, but this has since faded.
- Buying interest is being limited as heavy futures losses up the odds of lower cash cattle trade. Very light sales occurred yesterday at lower prices of $192 to $194 dressed in Iowa and Nebraska.
- Plus, the boxed beef market continues to give signs it is working on a near-term top. Yesterday, prices softened, though movement improved to 209 loads.
- Concerns about the global economy and any potential slowdown in red meat demand is adding light pressure.
- Softer corn prices have encouraged tentative short-covering in feeder cattle futures.
October lean hog futures are higher, while the rest of the market is under light pressure.
- Recent aggressive slaughter runs to take advantage of wide profit margins have helped get supplies current, which has, in turn, supported the cash market. Today, bids are mostly steady with a few firmer bids.
- But as cash gains have outpaced those of the pork market, profit margins have tightened, which could cause packers to exercise more restraint in their bidding.
- The pork market continued its rally yesterday. The pork cutout value rose 46 cents and movement surged to 118.02 loads.