Corn futures continue to enjoy gains of 2 to 8 cents at midday.
- Traders are unwinding some long-soybeans/short-corn spreads today.
- Also encouraging are recent signs sluggish corn demand may finally be improving.
- Gulf basis levels firmed 1 to 5 cents for March through June delivery this morning and basis levels around the country continue to strengthen.
- Recent daily sales announcements and export reports are also encouraging of ideas export demand is improving.
- Outside markets are a mixed bag. The U.S. dollar index firmer and crude oil futures under pressure, but the stock market is enjoying solid gains.
- However, recent improvement in drought conditions with more likely ahead thanks to this week's storm event limits upside potential.
Soybean futures have softened to post losses around 5 to 9 cents across the board.
- Spread unwinding with corn is pressuring soybeans.
- Plus, traders are putting increasing attention on a large South American crop coming available. Recent precip in Argentina and Brazil are favorable for record-large production and port workers have promised not to strike through March 15.
- Plus, recent export sales data and this morning's Gulf basis levels have signaled some pullback in export demand.
- The winter storm event moving into the Corn Belt this morning is also limiting buying interest. Plus, the latest Palmer Drought Index reflects improvement to the drought across the western Corn Belt, though much more is needed.
Wheat futures have softened slightly to trade mostly slightly higher in Chicago, steady to lower in Kansas City and narrowly mixed in Minneapolis wheat.
- Traders are weighing spillover from corn against recent improvement in drought conditions thanks to the record-setting winter storm event in the Southern and Central Plains.
- News the Russia winter grain crop is in worse shape than normal according to the head of the Russian Grain Union is also mildly supportive. He reports 2 million hectares have been destroyed by winterkill, which is 12.6% of the sown area, which compares to 8% on average.
- Strength in the U.S. dollar index on concerns about sequestration negotiations is also encouraging some light profit-taking.
Live cattle futures remain mixed at midday. Feeder cattle futures are posting moderate to sharp losses.
- Cash cattle prospects this week are uncertain, leaving futures vulnerable to some light profit-taking as nearby contracts remain at a premium to last week's cash trade at $123 to $125.
- On one hand, the winter storm event across the country's midsection is thought to have tightened the near-term supplies, Showlists are estimated to be down over last week at all locations -- notably so in Texas.
- On the other hand, the boxed beef market got off to an unimpressive start yesterday. Midday data is not yet available.
- Meanwhile, heightening euro-zone and U.S. economic headwinds remain a limiting factor. There has been talk the sequester could result in temporary beef processing plant closures or inspector furloughs, though such concerns are thought to be overstated.
- Strength in the corn market and the U.S. dollar index continues to weigh on feeder cattle futures. Some contracts are also seeing increased technical selling on the market's move to new contract lows.
Lean hog futures have softened to narrowly mixed trade.
- Most plants are bought ahead on near-term needs. Thus, cash hog bids are mostly steady today, despite profitable cutting margins for packers.
- While the pork cutout value firmed yesterday, movement was very light. Traders will need more solid signs pork demand is on the mend before they will be willing to add long positions.
- The market is benefiting from some light short-covering on ideas the downside has been overdone of late.
- The front-month contract is trading in line with the cash hog index, while the May contract is nearly $8 above the cash index. This signals the market expects a recovery in the cash market in the months ahead.