Corn futures are showing a mixed tone with old-crop contracts slightly firmer and new-crop contracts favoring a mildly weaker tone.
- The recent bull spreading is continuing in the corn market this morning, although buying interest in old-crop contracts is lighter than the past two days.
- Traders continue to react to the tighter-than-expected Dec. 1 corn stocks and the 2012-13 carryover projection from USDA last Friday.
- Key to whether this turns into more than a corrective bounce lies with demand and fund
- activity. Export demand news is lacking again this morning and Gulf basis is mostly softer. That means funds must remain active buyers or the price recovery will stall.
Soybean futures are mostly 1 to 9 cents higher, with stronger gains in some of the extreme far-deferred months.
- Soybean futures faced profit-taking through most of the overnight hours, but firmed early this morning and are so far maintaining gains.
- Support comes from strong demand, although there's no new news on that front this morning, and from Argentine crop concerns.
- While conditions remain mostly favorable in Brazil and the country is on pace for a record crop, developing dryness is a potential concern in areas of Argentina. Heat and dryness are starting to build in key production areas of Argentina after conditions were excessively wet earlier in the growing season.
Wheat futures are mostly 4 to 6 cents higher at all three exchanges this morning.
- Wheat continues to build on the corrective price recovery which started after USDA's January crop reports last Friday. Given heavy selling ahead of the reports, the market continues to work higher on short-covering.
- Fundamental support is coming from drought concerns in the U.S. Plains and winterkill worries in key production areas of Russia.
- But fresh demand news needed to fuel sustained price strength is lacking. U.S. wheat is still priced above the competition on most global tenders.
Live cattle futures are expected to open steady to lower. Feeder cattle futures are called mixed.
- Live cattle futures are expected to open under light pressure given the sizable premium they hold to the cash market. But selling should be limited as traders should keep futures at a premium to the cash market given tightening market-ready supplies.
- Cash cattle opinions have yet to be solidly formed. While market-ready supplies are tight, packers are working with highly negative cutting margins and the boxed beef market got off to an uninspiring start to the week yesterday.
- Feeder cattle futures are expected to open with a choppy tone, although traders will closely monitoring corn futures after strong gains in that market the past two days.
Lean hog futures are expected to start the day with a mixed tone.
- Mild profit-taking is anticipated after Monday's price gains. But selling interest should be limited as futures hold just a modest premium to the cash market.
- Cash hog bids are expected to be mostly steady as cash sources indicate supplies and demand are in relative balance. But some weaker undertones are possible as packer cutting margins are in the red.
- The pork cutout value was 48 cents lower and packers moved only 31.5 loads of product Monday.