Corn remains under pressure at midday with most contracts seeing losses around 6 to 7 cents.
- Rain in the forecast make it difficult for corn to find buyers, despite the fact they will do little good for the drought-stricken crop.
- Traders are booking some profits ahead of USDA's key crop reports Friday. Though these are expected to show diminished crop size, high prices are also expected to have caused demand destruction.
- Pre-report expectations are for USDA to peg new-crop production at 10.971 billion bu. and the national average yield at 126.2 bu. per acre.
- This morning's softer Gulf basis levels and a South Korean feedmaker's decision to pass on a tender to import corn -- the second time in less than two weeks it has done so -- adds to concerns about demand destruction.
Soybean futures have softened to trade 7 to 13 cents lower in all but the August contract, which is around 6 cents higher.
- Soybeans are being pressured by profit-taking as traders reduce risk ahead of USDA's Crop Production Report Friday. Pre-report expectations are for USDA to peg soybean yield at 37.2 bu. per acre for a production tally of 2.786 billion bushels.
- As the majority of the crop is filling pods, rain in the forecast for the northern and eastern Corn Belt could improve yield prospects, adding pressure to futures.
- Precip is certainly needed, as just 29% of the crop is rated "good" to "excellent" and the amount of soybeans rated "poor" to "very poor" continues to increase.
- August soybeans are benefiting from some bull spreading.
Wheat futures have backed off early losses, but remain slightly lower in Chicago and Kansas City while Minneapolis is favoring the downside in mixed trade.
- Bears maintain the upper hand in the wheat pit due to spillover pressure from corn. High corn and wheat prices have raised concerns about demand destruction.
- But losses are being limited by ongoing global crop concerns. Most recently, SovEcon says it sees Russia's wheat exports falling to 8.5 million metric tons (MMT) in 2012-13 from 21.6 MMT in 2011-12.
- Also limiting pressure is news spring wheat harvest is nearing the halfway point, at which point harvest-related pressure should ease.
Live cattle futures continue to enjoy slight gains in most contracts. Feeder cattle futures have reversed early losses and are slightly higher at midday.
- The boxed beef market built on yesterday's gains this morning. Choice cuts rose $1.28 and Select cuts surged $1.76. Movement was also strong at 125 loads.
- If this trend continues, expectations will mount for packers to pay prices above last week's $118 cash cattle prices, especially as showlist estimates are down slightly from week ago.
- But upside potential is being limited by the fact that August futures are already at a $2-plus premium to last week's cash prices.
- Feeder cattle futures are benefiting from spillover from live cattle and the corn market's retreat from early gains.
Lean hog futures are enjoying sharp gains in the August contract while deferred months are moderately higher.
- Lean hog futures are benefiting from ideas a low may be in for the pork market and that now-positive packer profit margins will eventually support the cash market. Pork movement this morning was strong. Cash hog bids are mostly steady today.
- Also, news China's government is stockpiling frozen pork to stop the fall in pork prices there has given futures a boost as it signals the country will take efforts to ensure pork prices account for high feed costs.
- But domestic hog supplies will continue to rise seasonally, which is making traders cautious buyers.