Corn futures have pared early gains to trade narrowly mixed at midday.
- Earlier gains in the corn market on spillover from soybeans and weakness in the U.S. dollar index have mostly evaporated at midday as traders are taking profits.
- Weekly corn export inspections of 9.626 million bu. came in well below expectations, reminding the market of demand destruction.
- The same can be said for steady to lower Gulf basis levels today.
- Countering this are ongoing concerns about the South American growing season. Argentina remains too wet and while southern Brazil has benefited from recent precip, this week's forecast is for a drier weather pattern.
- Risk appetite has declined after ISM manufacturing unexpectedly contracted in November to its lowest level in three-plus years.
Most soybean contracts are enjoying gains around 11 to 13 cents at midday.
- Soybeans are benefiting from ongoing signs of soy demand strength.
- Weekly soybean export inspections of 51.082 million bu. fell short of expectations, but this is still a strong tally. Inspections for 2012-13 are now running 39.9% ahead of last year; USDA's forecast for is for soybean exports to lag year-ago by 1.2%.
- Traders expect China to remain a major buyer of beans the first quarter of 2013, especially considering that the Lunar New Year celebration in February marks the peak production period for soy crushers.
- Meanwhile, soggy conditions in Argentina and an expected return to dry conditions in southern Brazil remain a source of support.
Wheat futures have turned narrowly mixed at all three exchanges.
- Wheat futures have seen some light profit-taking as risk appetite faded following the release of disappointing U.S. manufacturing activity data.
- Also encouraging this was a disappointing weekly wheat export inspections tally of 14.186 million bushels.
- But Egypt's purchase this weekend of 400,000 MT of wheat, including 280,000 MT of U.S. wheat has made traders optimistic tightening Black Sea supplies are finally translating to improved demand for U.S. wheat.
- Dryness on the U.S. Plains is being made worse by high winds there today. But this early in the growing season, support from drought concerns is limited.
Live cattle futures are posting slight losses, while feeder cattle futures are seeing slightly heavier losses.
- Live cattle futures remain under pressure after cash cattle trade took place at lower prices late last week at $125 to $126 on the Plains. But as December futures are just slightly above the top end of this range, selling interest is limited.
- Packer demand for cattle has slowed as they continue to cut in the red and the beef market typically sees a seasonal slowdown in demand at the end of the year.
- But the boxed beef market is off to a solid start this morning. Choice cuts rose 22 cents and Select firmed 65 cents. Movement was also decent at 100 loads.
- Also helping to limit selling interest are losses in the U.S. dollar index. This makes U.S. beef exports more attractive.
- Gains in the corn market are putting light pressure on feeder cattle futures.
Nearby lean hogs have improved to post slight to moderate gains through the April contract. Deferred months remain narrowly mixed.
- Nearby lean hogs continue to benefit from strong cash prospects. Cash hog bids are steady to higher today as packers continue to enjoy profitable cutting margins as solid pork demand ahead of the holidays has supported the product market.
- The cash hog index continued its rally today. It was most recently projected up 89 cents to $80.31. The fact that traders continue to push the December contract higher despite the contract's expiry in less than two weeks signals traders anticipate cash strength will continue.
- However, the market remains watchful for signs hog futures have put in a technical top.