Corn futures have pared early gains to trade mostly 3 to 5 cents higher.
- USDA's lower crop condition rating for the corn crop surprised traders as they have viewed weather as generally favorable and had largely brushed off slow development of the crop.
- Today, both of these factors are getting some attention. Observations of private crop watchers are also less favorable.
- But corn futures have trimmed in gains as midday weather updates point to increased wetness the latter half of next week.
- Gulf basis held steady for July delivery, but it slipped 10 cents for August delivery today. Recent daily and weekly export data have pointed to an uptick in demand, but this may point to a winding down of buys.
Soybean futures have reined in early gains, but most contracts are still enjoying double-digit advances.
- Yesterday's USDA crop progress and condition data set the stage for a rally today.
- USDA lowered its "good" to "excellent" soybean condition rating by 2 points to 65%. Traders had expected no change over week ago. This also resulted in a nearly 4-point decline in Pro Farmer's weighted Crop Condition Index.
- Also gaining some attention is the slow development of the crop. As of mid-month, just just 26% of the bean crop is blooming, compared to 40% for the five-year average pace.
- But early gains have given way to the some light profit-taking as forecast updates at midday that point to favorably wetter conditions this weekend onward.
- Weakness in the U.S. dollar index is also encouraging as it makes U.S. exports more attractive. Gulf basis firmed 2 cents for late-August delivery and 5 cents for early September delivery, signaling end-user concern about the bean crop and tight carryover.
Wheat futures have softened to narrowly mixed trade in Chicago, while Kansas City and Minneapolis are mostly fractionally to 2 cents higher.
- Early gains in the wheat market have given way to profit-taking as corn and beans have backed off earlier gains.
- While USDA yesterday lowered its spring wheat condition rating, a 70% "good" to "excellent" rating is still pretty impressive considering the poor start. Also, development is now just slightly behind the norm.
- Adding pressure are reports Japan has been substituting U.S. western white wheat with U.S. club white wheat, U.S. SRW wheat and Australian premium white. It says USDA must complete its investigation into the GMO wheat discovery.
- Also, news Russia has harvested 20 MMT of wheat of an expected 50 MMT remind that the country is expected to enjoy a rebound in production and exports.
Live cattle futures are steady to slightly lower at midday. Feeder cattle futures are mixed.
- Ongoing declines in the boxed beef market are pressuring live cattle futures today.
- This morning, Choice and Select boxed beef cuts fell 30 and 14 cents, respectively, and movement was a light 71 loads.
- While tighter showlists have some expecting at least steady trade with last week's $119 action in the Southern Plains, futures are at more than a $3 premium to these prices, opening the door for some profit-taking.
- A few hundred head of cattle changed hands in Iowa yesterday at steady with week-ago prices, but other locations have yet to set bids.
- Traders are also beginning to look ahead to Friday's Cattle on Feed Report, which is expected to confirm tightening supplies.
- Initial losses in the feeder cattle market spurred some bargain buying. This strongly suggests the market has put in a low. A pullback in the corn market has also been encouraging to that end.
Lean hog futures continue to post slight gains in most contracts.
- Followthrough and technical buying are lifting lean hog futures this morning.
- Plus, the new front-month contract is at more than a $6 discount to the cash hog index.
- This is limiting the impact of steady to lower cash hog bids today as packers work to improve near breakeven cutting margins. Many are well supplied on near-term needs.
- But hot, humid conditions across the Corn Belt are stressing animals and could make feedlots unwilling to transport animals.
- The pork cutout value fell 35 cents this morning, but movement picked up to 213.4 loads.
- Weakness in the U.S. dollar index is also limiting selling interest.