SOYBEAN HEDGERS: EXIT HEDGE IN NOV. SOYBEANS... Soybean futures have pulled back sharply from highs earlier this month, but they now appear ready to strengthen again. Soybean hedgers are advised to exit the 50% hedge in Nov. soybean futures. Be prepared to make cash sales on a return to the early June highs.
July corn futures are fractionally higher, while deferred contracts are around 1 to 3 cents lower amid some light bull spreading.
- The market continues to display limited concerns about saturated conditions in the western Corn Belt, as traders view rain as a good thing.
- Plus, crops in the eastern Corn Belt are off to a good start, with USDA raising its corn crop condition rating a point to 65% "good" to "excellent" as of Sunday.
- A drier 6- to 10-day outlook for Iowa and Minnesota and a wetter forecast for southern Illinois, Indiana and Ohio is adding pressure. Below-normal temps for much of the Midwest is less-than-ideal for drying out saturated soils, however.
- But expectations for USDA to cut its corn acreage estimate Friday due to the cool, wet spring is limiting selling interest.
- Gulf basis slid this morning and again at midday, which signals increased farmer selling. Basis slipped 4 cents for immediate delivery at midday.
Soybean futures are extending early gains slightly to trade 9 cents higher in the front-month and around 4 to 5 cents higher in deferred contracts.
- The market expects to be reminded of tight carryover supplies Friday; production uncertainty for the 2013 crop adds to such concerns.
- Yesterday's Crop Progress Report from USDA showed that as of Sunday, 8% of the soybean crop was still left to plant and 19% has yet to emerge. Traders had expected the crop to be farther advanced. The slow development and planting pace raises yield worries.
- Heavy rain in Iowa and southern Minnesota signals little progress will be made this week.
- Meanwhile, soy demand is expected to remain solid. China is expected to import a record 8.32 MMT of soybeans in June, according to China National Grain and Oils Information Center.
- But buying interest is also being limited by expectations USDA will raise its planted bean acreage estimate on Friday as some intended corn acres were switched to soybeans.
Wheat futures have softened at midday to trade mixed in Chicago, fractionally lower in Minneapolis and mostly 2 to 9 cents lower in Kansas City.
- Harvest pressure is giving bears an edge in the Kansas City wheat market. Plus, results are improving as combines move north.
- Minneapolis wheat, on the other hand, has not moved far from unchanged thanks to concerns many spring wheat acres will not be seeded and/or suffer yield drag based on the slow planting and emergence pace.
- Stats Canada put all wheat seedings at 25.9 million acres, which was just slightly less than expected but up 9.3% from year-ago.
- Outside markets are a mixed bag today, as the U.S. dollar index as well as the stock market and crude oil futures are firmer.
Live and feeder cattle futures are steady to slighlty firmer at midday.
- A lack of cash direction has resulted in choppy midday action. But nearby futures remain at a slight premium to last week's cash cattle trade, signaling expectations for at least steady trade this week in light of strong packer profit margins.
- Last week's sales took place mostly around $120 in the Southern Plains and at $120.50 to $122 in northern locations.
- But the boxed beef market is a limiting factor as prices were again choppy this morning. Choice cuts slid 84 cents and Select firmed 33 cents. Movement was again light at 92 loads.
- Traders are concerned beef demand will slow as the hottest weeks of the summer approach.
- Spillover from live cattle and light pressure on the corn market is also supportive of feeder cattle futures.
Lean hog futures are posting slight losses at midday.
- Lean hog futures are under pressure as traders view the upside as overdone for the product market and futures.
- Nevertheless, the pork cutout market rose another 47 cents this morning on improved movement of 175.3 loads.
- The cash hog index has been on the decline the past two days and packers are paying steady to lower prices today amid limited demand. But futures are still at a $3-plus discount to these prices, limiting pressure.
- The front-month contract is hovering above the psychological $100 mark. A move below that level would likely trigger sell stops as the market is on watch for a market top.