Corn futures are trading back near session lows ahead of midday, with most contracts down 5 to 8 cents.
- Traders are paying more attention to the demand side of the equation for corn today. The market believes slower export, feed and ethanol demand will be reflected in USDA's Supply & Demand Report Friday.
- Pre-report expectations are for USDA to cut its Argentine corn production tally from 28 MMT to 26.6 MMT. But analysts also expect USDA to raise its Brazil corn production estimate from 71 MMT in January to 71.1 MMT.
- Also, uncertainty about Argentine weather has caused some to move to the sidelines. Some weather models hold rain chances for Argentina this weekend through Thursday of next week.
Soybean futures have improved to narrowly mixed trade ahead of midday, though bears still have the advantage.
- While rain in the forecast for Argentina over the weekend and next week has led to some profit-taking today, red-hot Chinese soy demand has also encouraged some buying interest at times.
- Plus, heat and dryness in southern Brazil and Argentina are stressful for the developing bean crop this week.
- Traders expect that on Friday USDA will trim its Argentine soybean production estimate by 1 MMT to 53 MMT. But they also expect USDA to raise its Brazilian production estimate by 0.6 MMT to 83.1 MMT from last month.
- Gulf basis levels were steady this morning and at midday, signaling fresh export news is not likely on the horizon.
Wheat futures have extended early losses to trade around 8 to 10 cents lower in Chicago, 10 to 12 cents lower in Kansas City and roughly 4 to 7 cents lower in Minneapolis.
- As corn futures softened, profit-taking in the wheat market picked up.
- Rain in the forecast for the Central and Southern Plains this weekend is making it difficult for wheat to find buyers, despite the poor condition of the HRW wheat crop.
- Pressure is also coming from news India is looking for a way to increase its wheat exports as its government-owned reserves are more than three times the minimum requirement.
- Countering this, however, are reports Russian officials have decided to lift the 5% duty on grain imports until mid-summer following a government meeting on the grain situation.
- Also limiting pressure, Statistics Canada reports wheat stocks of 20.7 MMT at the end of December came in below expectations and 0.7% lower than the previous year.
- Also helping to limit pressure is news the U.S. attaché in Australia has lowered the estimate of the country's 2012-13 wheat crop by 2 MMT to 22 MMT.
Live cattle futures have improved to trade moderately higher in the front-month and slightly higher in most other contracts. Feeder cattle futures are also slightly to moderately higher.
- Traders are cautiously optimistic the boxed beef market may have put in a low. Both cuts of meat firmed yesterday and this morning, with Choice cuts rising $1.26 and Select cuts firming $1.16. Movement this morning was decent at 95 loads.
- Considering deeply negative packer profit margins and slightly higher showlist estimates, however, boxed beef strength must continue to get packers to raise cash cattle bids.
- Last week, cash cattle trade took place at $125 on the Southern Plains and at slightly higher prices at more northern locations.
- Outside markets have turned more favorable, with the dollar now under light pressure and the stock market enjoying strong gains.
- Softer corn prices are giving feeder cattle futures a lift.
Lean hog futures are slightly lower in the February contract, while other months are moderately lower.
- The February contract is benefiting from the $1-plus discount it holds to the cash hog index. But deferred months are under heavier pressure due to weakness in the product market.
- The pork cutout value slid again yesterday, pulling packer profit margins deeper into the red. This raises concerns about softening retail demand.
- Therefore, packers are paying steady to lower prices for cash hogs today.
- But seasonally tightening supplies should keep a floor under the lean hog market.