Corn futures continue to enjoy slight gains around 1 to 3 cents this morning.
- Corn futures are largely benefiting from spillover from soybean futures, although dryness in Argentina and southern Brazil is also a concern for the developing corn crop.
- Highly negative outside markets have caused corn to trim earlier gains in nearby contracts at times this morning. The U.S. dollar index is sharply higher this morning and crude oil and gold are sharply lower, creating some risk aversion in the commodity markets.
- Gulf corn basis is mixed this morning, with immediate delivery basis up a penny at 57 cents over March futures. Basis is steady for March delivery and 2 cents softer for April shipment.
Soybean futures are 11 to 15 cents higher on concerns about the weather in South America.
- Too much of a good thing fell across Mato Grosso, Brazil, over the weekend to delay harvest, but the big news is the hot and dry forecast for southern Brazil and Argentina this week.
- Traders are adding weather premium into soybean futures this morning after rains were a disappointment over dry areas of South America over the weekend. Drought conditions will worsen if the hot and dry forecast this week is realized.
- Meanwhile, Gulf soybean basis is steady to 2 cents lower for nearby delivery, which suggests a slowdown in demand.
- March soybean futures have moved above last week's high and are now challenging the December high of $15.01 1/4.
Wheat futures at all three exchanges are mostly 2 to 3 cents higher on spillover from neighboring pits.
- Wheat is benefiting from spillover from corn and soybeans, but highly negative outside markets are limiting buying.
- Also supportive is news over the weekend that Egypt has purchased 60,000 MT of U.S. SRW wheat, which signals U.S. wheat may once again be competitive on the global market.
- But traders will want to see larger purchases to confirm U.S. wheat's competitiveness.
- Kazakhstan ag ministry says it expected to export 7.8 MMT of grain in 2012-13, up 800,000 MT from its previous forecast. This is still down sharply from 2011-12, when it sold 12.1 MMT onto the world market.
Live cattle futures are called to open higher in reaction to bullish Cattle Inventory Report.
- Cattle futures received bullish supply news on Friday via the Cattle Inventory Report, which showed total inventory coming in just below expectations and that heifer retention has begun.
- With producers beginning to hold back heifers from the slaughter mix, the 10-year cattle cycle should remain on course for this year.
- Meanwhile, traders are waiting for the boxed beef market to post a low. Choice values fell $2.76 on Friday and Select was down $1.63 on strong movement of 238 loads.
- The beef market must stabilize to encourage packers to raise cash bids given negative profit margins.
Lean hog futures are called to open steady to firmer on strength in the pork market.
- Futures are expected to see a lift on spillover from live cattle as well as strength in the pork market.
- Pork values improved $1.77 on Friday to trim packers' losses, although their margins remain in the red.
- The cash hog market is expected to be mostly steady to start the week. Some packers are in need of supplies, but it's largely thought that some hogs were carried over from last week due to weather disturbances.
- Strength in the grain markets will limit strength in the hog pit.