Corn futures have lost ground from earlier and are about 3 to 5 cents lower in most contracts.
- Rains in Brazil have some traders looking for a boost in that country's corn crop coupled with a stronger U.S. dollar index has corn futures on the defensive today.
- The market is also lower on reports China rejected more U.S. DDGs due to unapproved GMO material. This counters comments from China last week indicated it would relax inspections of U.S. DDGs. However, amounts and confirmation of these rejections remains absent at this time.
- Traders are also digging into USDA's supply and demand projections and are challenging the agency's feed use numbers. They suggest the combination of low cattle numbers and high pig death losses from PEDV will keep actual use from reaching USDA's figure. That suggests carryover supplies could be higher than currently projected. However, some counter that livestock producers will carry their animals to heavier weights, which will offset the decline in numbers. The March Quarterly Grain Stocks Report is the next chance to get an update on implied use.
- Ethanol production for the week ended Jan. 9 declined 51,000 barrels per day (bpd) to 868,000 bpd. Ethanol stocks fell 60,000 barrels to 16.08 million barrels.
- Traders are shrugging off continuing drought concerns in Argentina as "old" news.
- Gulf corn basis is steady for immediate, March and April delivery and a penny lower for February and May delivery.
Soybean futures continue to trade mixed with the March through August contracts 1 to 9 cents higher and far-deferred months 1 to 2 cents lower.
- Bull spreading continues to be seen but some early strength has eased from the market on spillover from corn futures.
- This morning's NOPA soybean crush data was price-supportive as it came in at a record 165.38 million bushels. This is higher than expectations of a 163.9 million bu. crush and up from 160.15 million bu. in November and 159.899 million bu. last year.
- Nearby contracts continue to gain from the stressful forecast for Argentina as some private crop watchers have lowered their Argentine soybean production estimates due to the continuing heat and drought in the country.
- Nearby contracts also saw light support in early trading from USDA's announced sale of 106,000-MT to China for 2014-15.
- Deferred months are under pressure on expectations of larger soybean plantings in 2014.
- Gulf soybean basis is steady for all delivery months except for March, which is 2 cents higher.
Wheat futures have extended losses with SRW and HRW down mostly 6 to 9 cents and HRS down 4 to 6 cents.
- Selling continues to dominate trading as U.S. wheat fundamentals remain pervasively bearish.
- Spillover from corn and gains in the U.S. dollar index are also adding to the negative tone.
- Light pressure also stems from news India's farm ministry expects its wheat crop to top 100 MMT. If realized, it would be a record. U.S. wheat is already not competitively priced on the global market and news or rising stocks anywhere in the world is seen as negative.
- Traders are largely ignoring forecasts for above-normal temps, high winds and limited precip for the Plains as the crop entered dormancy in good shape.
- However, early state crop condition updates have reflected deterioration in ratings. Texas, for example, saw a 10-percentage-point increase in the amount of wheat rated "poor" to "very poor" since the last condition update in late November.
- Gulf SRW wheat basis is unchanged in late-morning trading after sliding 5 cents for immediate delivery in early morning action.
Nearby live cattle contracts have extended gains to sharp level. Far-deferred months are slightly higher. Feeder cattle futures are moderately higher.
- Front-month live cattle continue to trade at or near the top of today's range, reaching a new contract high and leaving the opening gap unchallenged.
- The surge came as the trade comes to grips with the rise in boxed beef prices, tighter showlists and the move into the black for packers on their cutting margin.
- Choice boxed beef values jumped again this morning adding another $2.73 to prices and reaching $223.77 per cwt. Select beef rose $1.94 and is pegged at $221.29. Movement is a moderate 84 loads.
- Cash cattle sales last week mostly took place in the $139 to $140 area and some operators are asking for higher bids this week. Meanwhile, the February contract has narrowed its discount to last week's prices in the Southern Plains.
- Weaker corn prices and the stronger live cattle futures continue to boost feeder cattle futures.
Lean hog futures continue to post slight to moderate gains.
- Futures opened stronger on spillover from live cattle and yesterday's stronger pork cutout figures.
- However, this morning's pork cutout value fell $2.26 and that has futures trading near their opening price and challenging support in the gap area.
- But pork movement is a strong 311.2 loads. This has traders thinking the jump in beef prices is helping pork put in a seasonal low.
- Cash hog bids are steady to lower today as packers are having no trouble securing supplies with the improvement in the weather.
- Average hog weights in Iowa and southern Minnesota declined 0.3 lb. last week, but the estimated head count rose by nearly 20,000 from the week prior. However, hog numbers are estimated down 32,000 head from year-ago.
- Today's trading continues to widen the already wide premium February futures hold to the cash hog index, which suggests traders believe a low has been posted.