Corn futures have pared gains to trade fractionally higher to 1 cent higher in most contracts.
- The start of pit trading led to some light profit-taking in the corn market as export demand improvement is needed to spark the next leg higher in prices.
- This morning's weekly export inspections tally of 10.959 million bu. met expectations but the pace of export inspections slipped to 56.3% behind year-ago. USDA expects 2012-13 exports to lag year-ago by just 38.4%.
- But the market's downside remains limited by tight U.S. supplies, which heighten concerns about dryness in Argentina and southern Brazil.
- Dollar weakness and ideas Mexico may need to increase its corn imports after frost damage in key growing areas are giving bulls a slight advantage today.
Soybean futures have extended early gains to trade 20-plus cents higher in old-crop contracts, with new-crop months posting gains mostly in the teens.
- Soybean futures extended gains on weekly export inspections tally of 48.075 million bu. that topped expectations and improved nearly 6.75 million bu. over last week.
- In addition, the soybean market continues to benefit from building dryness and a generally unfavorable near-term forecast for relief for Argentina and southern Brazil. In Argentina, especially, the wet planting season has resulted in a shallow root system that leaves the crop more vulnerable to drought.
- Support also stems from USDA's announcement of a daily sale of 120,000 MT of optional-origin soybeans to China for 2013-14.
Wheat futures have softened to trade roughly 6 to 9 cents lower in Chicago and Kansas City while Minneapolis is seeing lighter losses.
- Profit-taking in the wheat market picked up after earlier gains. Traders are still waiting on proof that export demand is improving.
- This morning's weekly export inspections report did reflect some improvement. Inspections of 21.857 million bu. topped expectations and more than doubled last week's tally.
- Concerns about dryness in the Southern and Central Plains and winterkill in northern locations is also keeping selling interest in check.
- The same can be said for talk Russia may lift its grain import duties as this could increase export demand for U.S. wheat. However, the country's deputy prime minister has signaled he opposes any such move.
Live cattle futures have strengthened to trade sharply higher the February contract, while deferred months are slightly to moderately higher. Feeder cattle futures have also improved to post slight to moderate gains.
- Short-covering in nearby live cattle contracts has picked up as traders consider last week's heavy losses as overdone, especially considering reports Japan will soon ease its beef import restrictions for the U.S. and Canada.
- Cold weather in the Midwest is also thought to be limiting cattle weight gain, emphasizing the tight supply situation. Tighter showlist estimates this week are also supportive.
- Notable improvement in boxed beef market performance is needed to inspire higher cash trade this week. This morning's 89 cent gain in Choice cuts and a $1.78 rise in Select cuts and an impressive 246-load surge in movement signals that may be in the works.
- A pullback in corn prices from earlier gains has caused short-covering in feeder cattle to increase.
Lean hog futures have improved to post slight gains in most contracts.
- Variable cash hog bids today have led to light short-covering.
- While negative packer profit margins make them unwilling to actively raise cash bids, frigid temps in northern locations have made market-ready hog supplies hard to come by in some regions.
- The pork cutout value slid Friday and movement was unimpressive. However, movement of 30.33 loads this morning was solid, signaling demand may be on the rise after downtime Monday for the Martin Luther King Jr. holiday.
- Traders are also readying positions for this afternoon's Cold Storage Report. It is is expected to show frozen pork supplies as of Dec. 31 at 527 million lbs., which would be up 8.8% from last year but down 5.5% from the previous month.