WHEAT PRODUCERS: FINISH OLD-CROP SALES... We waited as long as we could for the wheat market to respond to HRW crop concerns. With the 2012-13 marketing year ending Friday, it's time to finish old-crop sales. Hedgers and cash-only marketers are advised to make a 25% 2012-crop sale to get to 100% sold in the cash market on old-crop.
While areas of the Plains are getting some late-season rains, we still feel the market will eventually respond to reduced HRW production. As a result, we are willing to wait before making new-crop sales.
Corn futures are seeing bull-spread unwinding continue. July corn is down 7 cents, while new-crop has improved to trade double-digit higher.
- Old-crop corn is down in spillover pressure from soybeans on news China canceled soybean purchases.
- New-crop corn is getting support from planting delay concerns and reports of lowland flooding across much of the western Corn Belt, and more rain is falling in western areas. Plus the forecast calls for more rain Thursday and Friday.
- Gulf basis is unchanged at midday after firming for immediate delivery this morning.
- A weaker U.S. dollar index is supporting new-crop corn.
Soybean futures are slightly lower in the July contract, while new-crop has moved into positive territory.
- Traders continue to pressure old-crop futures on the news China canceled 147,000 MT in soybean purchases for 2012-13, fueling concerns about weakening export demand. Traders are shrugging off weakness in the U.S. dollar index as a result.
- Rising concerns about delayed plantings have lifted new-crop beans. USDA says soybean planting is 17 percentage points behind normal with just 44% of the crop was planted as of Sunday.
- With rain again falling in the western Corn Belt and forecasts calling for more, traders expect little progress in planting will be made this week.
- Just 14% of the crop is emerged, compared to 30% on average and 57% last year.
- The delayed planting concerns are offset somewhat by expectations delayed corn plantings will eventually mean addition soybean acres.
Wheat futures are higher with Chicago up 7 to 10 cents, Kansas City up 4 to 6 cents and Minneapolis up 3 to 9 cents.
- Wheat futures are benefiting from spread trading against corn.
- The market was also reminded of the poor state of the winter wheat crop yesterday. Pro Farmer's weighted Crop Condition Index shows the HRW and SRW crops each slipped by 3 points from last week. USDA rated 42% of the winter wheat crop in "poor" to "very poor" condition, down a percentage point from the week prior.
- USDA says spring wheat planting advanced to 79% complete last week, which compares to 86% complete for the five-year average.
- Major rain in the Northern Plains this week will further delay planting.
- The weaker U.S. dollar index is also providing support.
- SovEcon revised its 2013-14 Russian wheat crop higher to 50 MMT, with wheat exportable supplies at 13 MMT to 15 MMT.
- Australia's wheat production for 2013-14 is expected to rise 2 MMT over year-ago to 24 MMT, according to a senior industry official for the country.
Live and feeder cattle futures are moderately higher at midday.
- Traders are reacting positively to the rise in Choice boxed beef today after yesterday's decline. It rose $1.35 today to $209.89, and movement was strong at 136 loads. Select cuts also firmed $1.04.
- Showlist estimates are up from week-ago but strong packer profit margins and improvement in the beef market adds some uncertainty as to cash cattle prospects. Active trade is not expected until at least Thursday.
- Weakness in the U.S. dollar index is also supportive.
- Feeder cattle are benefiting from gains in live cattle futures and declines in old-crop corn prices.
Lean hog futures are posting moderate gains.
- Lean hog futures are responding positively to news the Chinese company Shuanghui International will buy Smithfield Foods, as this is expected to boost U.S. pork export opportunities.
- The seasonal downswing in market-ready supplies is underway and cash prices are holding steady.
- The product market is also supportive today, as the pork cutout value rose 61 cents and movement surged to 274.7 loads.
- This has packer profit margin is crawling out of the red, which is seen as positive.
- June lean hogs are at nearly a $1.50 premium to the cash hog index.