Corn futures are mostly 1 to 2 cents higher amid short-covering.
- Focus in the market is on evening positions ahead of USDA's key reports to be released on Friday morning. Traders don't want to be caught heavily long or short in case of a report surprise.
- According to pre-report expectations, traders look for the report to show a slight drop in the size of the 2012 corn crop.
- Traders are generally ignoring strength in the dollar index, although this is serving to limit buying in corn futures.
- Buying is also being capped by prospects for a larger corn crop in Brazil, as the country's supply estimating arm, Conab, modestly raised its crop forecast to 72.19 MMT and sees corn exports at 21.5 MMT.
- March corn futures remain confined within the boundaries of this week's narrow trading range, currently testing resistance at yesterday's high of $6.94 1/2.
January soybeans are firmer, but the rest of the market is marginally to 4 cents lower.
- Price action has been muted so far today, with traders taking a cautious approach toward the market ahead of Friday's key USDA reports.
- Traders look for the report to show a slight increase in the size of the 2012 soybean crop.
- Meal futures are weaker, with soyoil firmer amid spreading.
- Record crop potential in Brazil is also limiting buying interest. Conab raised its estimate of the crop to a record 82.7 MMT. Traders anticipate Brazilian soybean supplies will be in exportable position by February.
- This week's forecast is mostly favorable in Brazil, with some of the drier areas expected to get precip.
- USDA announced an optional-origin soybean sale of 120,000 MT to China for 2013-14. Reaction to this news has been limited as the destination has not yet been announced.
Wheat futures are favoring a weaker tone at all three exchanges, trading mostly 3 to 4 cents lower.
- Given a lack of fresh news, wheat is being pulled lower by strength in the U.S. dollar index.
- But selling is being limited as traders don't want to extend long or short positions too far ahead of Friday's key USDA reports.
- Traders expect USDA's reports to show an increase in winter wheat seedings compared to last year, as guaranteed crop insurance prices likely attracted some acres.
- Rains moving across Texas this morning are also weighing on the market, although lighter amounts are being noted in Kansas and Oklahoma.
- March Chicago wheat futures have slipped below support at yesterday's low, but remain above last week's low of $7.39 3/4.
Live cattle futures remain weaker, but have moved off session lows.
- Traders are narrowing the premium nearby live cattle futures hold to the start of this week's $128 cash cattle trade.
- No followup trade has been reported after light trade was reported in Texas yesterday. Remaining feedlots are asking $130 for cattle, but their bargaining power has been weakened since they carried supplies over from last week.
- Boxed beef prices are mixed, with the Choice/Select spread narrowing to $9.85 premium Choice. Movement remains strong, as 182 loads changed hands this morning.
- February live cattle violated support at last week's low of $131.95, but are now pivoting around this level.
- Feeder cattle futures are seeing pressure from strength in the corn pit. January feeders are working to be more in line with the cash index.
Lean hog futures remain under moderate to heavy pressure on weakness in the cash hog market.
- Traders are opting to take more premium out of nearby lean hog futures given the softer tone developing in the cash hog market. February lean hog futures are now trading in line with the cash index.
- The cash hog market is steady to as much as $2 lower. Packers say they have this week's needs secured and are now focused on improving profit margins. This points to weaker bids again tomorrow.
- February lean hog futures gapped lower on the open and have extended losses past last week's low of $84.90. A low-range close would make bears' next target the December low of $83.20.