Corn futures are mixed amid mild bull spread unwinding.
- Corn futures favored a firmer tone overnight due to tight old-crop stocks and technical indications a near-term low has been posted. But as the dollar index has strengthened, some buying has evaporated from the corn market and nearby futures have softened.
- Gulf corn basis is 3 cents higher for immediate delivery at 76 cents above May futures, while basis for April delivery has softened by a penny to 70 cents over May futures.
- Also this morning, USDA announced a 114,300 MT purchase of grain sorghum to an unknown destination for 2012-13, which is further proof of end-users seeking alternatives to corn given tight corn supplies.
Old-crop soybean futures are 6 to 14 cents lower, while new-crop futures are showing lesser declines.
- May soybean futures are leading losses as traders unwind bull spreads. Additional spread unwinding with the corn market is adding to the weaker tone.
- A strengthening U.S. dollar index is also weighing on soybean futures this morning.
- Additional pressure on old-crop futures is coming from a softening of Gulf soybean basis, which is down 5 cents from yesterday to stand at 80 cents above May futures.
- While Brazilian shipping delays are still filtering some demand to the U.S., traders expect importers' focus to soon shift to the abundant South American crop.
Wheat futures are mixed with a downside bias.
- Wheat futures softened as corn moved off its earlier highs.
- May Chicago wheat is trading at around a 10-cent discount to May corn futures as the market searches for a price that encourages demand. That should limit selling unless May corn futures come under solid pressure.
- Recent moisture improvements across the Central and Southern Plains are limiting buying in wheat, although timely rains will be needed to sustain the crop as it continues to come out of dormancy.
- Meanwhile, the deputy minister for ag in Saskatchewan says Canadian officials are looking to increase exports into the Southeast Asian market.
Live cattle futures are called steady to firmer on followthrough from yesterday's gains.
- Live cattle are expected to see followthrough from yesterday's gains, but buying could be limited as traders wait on packers to bid for cash cattle.
- Rising boxed beef values are also expected to lift futures, although lackluster beef movement keeps demand concerns on traders' minds. Yesterday, Choice values improved 40 cents and Select rose 10 cents, but movement was lackluster at 135 loads.
- Choppy price action is likely in feeder cattle as neither live cattle nor corn is likely to provide strong spillover.
Lean hog futures are called mixed, with buying limited by lackluster demand for cash hogs.
- Signals lean hog futures have posted a near-term low have helped to limit selling recently, but packer demand for cash hogs remains light, limiting the upside to corrective short-covering.
- The pork cutout value slipped 43 cents yesterday, but movement of 122.63 loads suggests prices are encouraging demand.
- Packers' profit margins are tight, but are in the black. The cash hog market is expected to be mostly steady today as plants work to fill in late-week needs and start buying hogs for early next week.