Corn futures are fractionally to a penny higher in 2014 contracts, with deferred contracts mixed.
- Early gains in corn futures have been trimmed on a disappointing weekly export inspections report.
- USDA reports 19.318 million bu. passed inspections for the week ending Jan. 2. This is down 9.426 million bu. from last week and below pre-report expectations.
- But light short-covering continues to boost corn futures along with slight weakness in the U.S. dollar index. Spillover from soybeans also provides support.
- USDA's announcement that Mexico has purchased 110,600 MT of U.S. corn for 2013-14 is also supportive.
- Ideas current cold temps will increase feed demand from livestock producers is adding to the positive tone.
- Limiting gains is news from China's Xinhua news agency the country has rejected a total of 601,000 MT of corn and corn by-products from the U.S. in 2013 due to the presence of an unapproved GMO trait.
- Long-only index funds are rebalancing their portfolios to start the new-year, which is likely to influence price action this week.
- Gulf corn basis is steady in midday trading with the exception of a penny decrease for May delivery.
Soybean futures are 2 to 8 cents higher through the August contract and steady to 2 cents weaker for deferred contracts.
- Nearby soybean futures are stronger on the friendly weekly export inspections report, but the negative chart picture is limiting gains, and light bull spreading is pressuring far-deferred contracts.
- USDA reports 56.446 million bu. passed through inspections for the week ending Jan. 2, which is up 12.708 million bu. from last week and above expectations.
- Traders are balancing the record-large bean crop expected from South America against a return of dry weather and warmer temps this week for Argentina.
- Traders continue to shrug off news of confirmation of two new human cases of the H7N9 bird flu in China over the weekend as Chinese officials are saying the risk of widespread outbreak is low.
- Corrective short-covering is underway this week on ideas last week's decline was overdone. Thus far, the January soybean contract has had a tough time finding sustained buying interest above $13.00.
- Gulf soybean basis is steady for near-term delivery but 5 cents weaker for March delivery. Basis for April and May delivery is steady at midday.
Wheat futures are fractionally to 2 cents higher, with nearby HRW contracts leading gains.
- The extreme cold in the Midwest and Plains is raising concerns about winterkill, especially as snowcover in some areas is "patchy." Also, hard freeze warnings are in effect as far south as Texas and the Gulf coast. Some crop watchers report 15% to 20% of the crop may be damaged already.
- The weekly export inspections report came in as about expected at 13.601 million bu., which is little changed from the previous week.
- Ideas feed demand will increase from livestock producers as a result of frigid temps is supporting gains, as well.
- Corrective short-covering is also underway as wheat futures were heavily oversold according to the Relative Strength Index last week.
- Also supportive is USDA's announcement that 160,000 MT of U.S. wheat were sold to an unknown buyer for 2014-15. Of the total, 128,000 MT is HRW and 32,000 MT is SRW.
- Gulf SRW wheat basis is steady for immediate delivery, 1 cent higher for February delivery and steady for March through May delivery at midday.
Live cattle futures continue to trade slightly higher in most contracts, while feeder cattle futures are slightly to moderately higher.
- The combination of stronger wholesale beef prices and extremely stressful weather has futures trading higher.
- Today's wholesale boxed beef market shows Choice up 82 cents and Select up $1.60 and movement was an encouraging 92 loads. Of note, this brought Select cuts to $200.70 per hundredweight.
- Traders are still adjusting their outlook in the face of record-setting cash cattle trade which saw $137 paid last week in the Southern Plains and even higher prices being seen in Nebraska.
- Meanwhile, the arctic temps in cattle country is stressing cattle in feedlots as well as the cow herd.
- Looking ahead traders expect cattle numbers to tighten as producers retain cattle for herd rebuilding. This is providing support for both live cattle and feeder cattle futures.
- Limiting buying interest are concerns cattle futures are heavily overbought according to the Relative Strength Index.
Lean hog futures continue to mark slight losses this morning.
- Mild profit-taking continues to dominate trade as traders sort out near-term price direction. Traders continue to watch for signs of a seasonal low. The cash hog index has firmed in recent sessions, but the wholesale pork market has struggled to put in a low.
- Dangerously cold weather across the Midwest along with some snow and ice are halting hog transportation to start the week. As a result, cash hog bids are steady to higher as plants are having a difficult time securing needs.
- Some plants are closed or are calling off shifts due to difficulty of getting both supplies and workers to the plants.
- The pork cutout value fell another 71 cents today on slow movement of 135.91 loads.
- The lead February contract is testing support just above the Jan. 2 gap from $85.75 to $86.10.