Corn futures have improved to trade roughly 6 to 11 cents higher in most contracts.
- Strength in the U.S. dollar has encouraged profit-taking at times this morning, but bulls are dominating at midday thanks to heightened crop concerns.
- Yesterday, USDA lowered its corn crop condition rating by 9 percentage points (4 more than expected) to 31% "good" to "excellent."
- The forecast does little to improve the outlook, as the drought conditions encompass the Corn Belt and record-setting heat with limited precip chances signals such conditions are more likely to intensify than to ease.
Soybeans have reversed early losses and are now enjoying gains of roughly 1 to 6 cents, with nearby contracts leading gains.
- The ongoing rally in the corn market has encouraged traders to cautiously build more weather premium into prices today stressful high temps for a crop that already is rated 30% "poor" to "very poor."
- Rain chances for the eastern Corn Belt and upper Midwest are encouraging bulls to exercise more restraint today as weather rallies often run their course before full yield deterioration is realized.
Wheat futures have improved to post double-digit gains in Minneapolis and Kansas City wheat, while Chicago is seeing lighter gains.
- Wheat futures firmed as the dollar backed off its early gains and buying interest mounted in the corn market.
- The market's downside remains limited by crop concerns in areas of Europe, the Former Soviet Union, China and Australia. Most recently, Kazakhstan's ag ministry says it expects its grain harvest to total 14 million metric tons (MMT), which is well below last year's 29.7 MMT production total.
Live cattle futures have moved off their lows, but most contracts are still seeing slight losses. Feeder cattle futures remain sharply lower.
- Live cattle futures moved off their lows thanks to boxed beef market improvement this morning. Choice cuts firmed 25 cents while Select cuts rose $1.65 on decent movement of 107 loads.
- But traders remain wary about how heat will affect beef demand. While high temps limit weight gain, they can also encourage producers to market cattle earlier than usual (tightening supplies down the road) and harness grilling demand.
- Initial cash cattle bids are at $112 in Texas and Kansas, while asking prices are several dollars above last week's $114 to $115 trade, signaling late-week trade is likely.
- Strength in corn and confirmation of deteriorating pasture conditions by USDA yesterday are weighing on feeder cattle. Traders are ignoring the market's severely oversold status.
Lean hog futures are moderately to sharply lower.
- Cash hog bids are mostly lower today (sharply so at some locations), as demand is light and packers are working to improve negative profit margins.
- While heat across the country is limiting animal weight gain, it is also encouraging producers to sell hogs early and deterring consumers from firing up the grill. Consequently, pork cutout values slipped 68 cents yesterday, though movement was decent.
- Pressure on August hogs is being limited by the steep discount it holds to the cash index.