CORN AND SOYBEAN CASH-ONLY MARKETERS: FINISH OLD-CROP SALES... With July corn and soybean futures trading at major premiums to the September corn and August soybean contracts, we want to capture that premium before the July contracts enter delivery on Friday. Cash-only corn and soybean marketers are advised to make the final 10% 2012-crop cash sales to get to 100% sold on old-crop. Additional basis strength will replace some of the premium July futures hold to September corn and August beans, but with basis already at historic levels, we don't feel the cash market will cover all of the difference.
HOG PRODUCERS: HEDGE ANOTHER 25% OF 2ND-HALF PRODUCTION... Hog futures remain strong, but we feel a seasonal top is coming soon and want to hedge more of second-half production ahead of Friday's Hogs & Pigs Report. Hog producers are advised to hedge 25% of expected 3rd-qtr. production in Aug. lean hog futures and 25% of expected 4th-qtr. production in Dec. lean hog futures. This pushes second-half hedge coverage to 50%.
July corn futures are 6 cents higher and new-crop contracts are around a penny lower.
- Position evening ahead of Friday's USDA reports is occupying trader's attention. Market surveys indicate traders expect USDA will cut nearly 2 million acres from its March estimate to 95.34 million acres.
- Some traders remind it is the Grain Stocks Report that has the reputation for containing major market-moving surprises. Pre-report expectations are for corn stocks to come in at 2.856 billion bu. as of June 1, compared to 3.148 billion bu. last June.
- Nearby futures are finding support from reports ethanol production picked up last week to 885,000 barrels per day, up 12,000 bu. from the week prior. Ethanol stocks declined to 16.3 million barrels compared to 16.5 million barrels last week.
- New flooding swept into eastern Iowa this morning and more rough weather is impacting the slow-maturing crop. Meanwhile, the dry Ohio Valley is forecast to receive several inches the next few days. But traders view the 6- to 10-day outlook, which calls for below-normal rain and below-average temps, as favorable for the the western Belt.
- Gulf basis is unchanged in late-morning trading.
Soybean futures continue to trade mixed with some bull spreading. July is up 3 cents and deferred contracts are mostly 6 to 10 cents lower.
- A firming in Gulf soybean basis this morning prompted the upswing in July futures as traders are reminded once again of the tight old-crop supply situation.
- Buying interest in new-crop futures is limited by expectations USDA will raise its soybean acreage estimate from March by 898,000 acres to 78.024 million acres.
- The market also expects USDA to peg soybean stocks as of June 1 at 441 million bu., which would be down 226 million bu. from last year at this time.
- Traders are shrugging off reports of heavy flooding in eastern Iowa this morning and forecasts for heavy rains to sweep across the upper Corn Belt believing moisture is, in the long run, a positive for crop development..
- Gulf basis is basically unchanged in late-morning trading with the exception of late-half September delivery which is a penny stronger. This follows the stronger basis levels seen in early morning trading.
Wheat futures are 3 to 4 cents lower at Chicago, 1 to 4 cents lower at Kansas City and mixed at Minneapolis.
- Futures were mixed initially on concerns heavy rains in the eastern Midwest would result in quality problems for the SRW crop.
- However, strength in U.S. dollar index has brought selling pressure back into the market.
- Also, harvest pressure continues to depress Kansas City futures.
- Minneapolis wheat contracts continue to see some buying interest over continuing concerns about slow planting and crop development.
- Traders are looking ahead to Friday's key USDA reports. Traders look for USDA to trim spring wheat acreage from March intentions by around 584,000 acres to 12.117 million acres. All wheat acreage is expected to come in at 55.751 million acres, which would be down 689,000 acres from USDA's March estimate.
- The market expects USDA to peg June 1 wheat stocks at 750 million bu., which would be in line with year-ago.
- Gulf basis late morning is unchanged from early morning levels.
Live cattle futures are slightly to moderately higher. Feeder cattle futures are also firmer.
- Short-covering continues to lift live cattle futures.
- Futures are trading at around $1 premium to the bulk of last week's cash action.
- Showlist estimates are up slightly in Kansas and Texas, though they are down in Nebraska.
- Choice boxed beef moved $1.24 lower this morning to $196.33 but Select beef rose 24 cents to $186.16. Movement is a positive 150 loads.
- Weaker corn prices and firmer live cattle futures are lifting feeder cattle futures.
Lean hog futures are mixed with the July contract down marginally but the August through December contracts mildly firmer.
- Traders are reluctant to press futures much higher as they are looking to a seasonal top in both cash and futures to be posted soon.
- The wholesale pork market continues to press higher, however. The pork cutout value rose another $1.31 this morning and movement is a strong 223.2 loads.
- Cash hog bids are steady to lower again today as demand is limited as packers work out slaughter schedules around next week's July Fourth holiday-shortened week.
- Mexico announced it is blocking imports of U.S. live pigs in response to the PEDV situation. But importantly, the ban does not involve meat exports.