Corn futures remain split, with the front-month around 6 cents higher and deferred contracts mostly 3 to 4 cents lower.
- Traders are engaging in some bull spreading ahead of the weekend on ideas the downside has been overdone in old-crop futures considering tight supplies.
- Gulf and interior basis levels have firmed this week, signaling tight supplies and possibly improved export demand.
- New-crop contracts remain pressured by expectations for a rebound in 2013-14 production, as the market believes "rain makes grain."
- The market remains unconcerned about the potential yield drag on the crop due to the late planting date, poor stands and the fact that some prime production acres in Iowa and Minnesota will not be seeded or replanted.
- Thus, the market is brushing off forecasts for Corn Belt rains this weekend and next week.
Soybean futures are fractionally to 1 to 7 cents lower, with new-crop futures leading losses.
- Tight old-crop supplies and expectations for a rebound in production in 2013 continues to encourage bull spreading in soybeans.
- Recent improvement in basis levels around the country and expectations for NOPA crush data to reflect a slowdown in crush for the month of May from April are indicative of tight old-crop supplies.
- Traders continue to view recent and forecast rains as a positive for 2013 production.
- While rains likely caused some producers to switch intended corn acres to soybeans, there are also concerns about getting the bean crop planted in the Upper Midwest, and there are development concerns for acres that have been seeded.
Wheat futures remain mostly 6 to 10 cents lower in Chicago and Kansas City, while Minneapolis wheat is 5 to 6 cents lower.
- Harvest-related hedge pressure is weighing on the Chicago and Kansas City wheat markets to wrap up the week.
- Spillover from corn and soybeans adds to the negative tone.
- Also, traders still have USDA's bearish production report on their minds, as USDA raised rather than reduced its all wheat and HRW crop estimates.
- Also, USDA confirmed expectations for plentiful global wheat supplies Wednesday, which is limiting concerns about the impact of any winter wheat crop shortfall.
- Meanwhile, wheat export demand remains limited as trade partners await USDA's issue of a "rapid test" kit to detect GMO material.
- Traders in the Minneapolis wheat market are reducing risk ahead of the weekend and Monday's update on spring wheat planting progress.
Live cattle futures are posting slight to moderate losses at midday. Feeder cattle futures are slightly lower in 2013 contracts, but slightly higher in far-deferred months.
- Traders expect that cash cattle trade will take place at steady to $2 lower prices when it gets underway on the Southern Plains. This is already factored into futures prices.
- But so far, just light sales have been reported at $122.50 to $126.50 in Iowa yesterday -- steady to firmer compared to last week's action in the state.
- Adding to the negative tone, Choice and Select values fell 48 cents and 82 cents, respectively, and movement was light at 72 loads.
- Traders are again working to narrow the steep premium nearby feeder cattle futures hold to the cash index. Expectations for softer corn prices ahead are boosting far deferred contracts.
June lean hogs were moderately higher just ahead of the contract's Noon CT expiration. Deferred months are slightly to moderately lower.
- Lean hog futures are facing profit-taking pressure ahead of the weekend as some uncertainty exists about sustainability of the market's recent rally and market-watchers are looking for a top, especially with packer profit-margins buried in the red.
- The cash market has recently trended steadily higher as supplies are tight, but the product market has failed to keep pace, encouraging some plants to reduce kill hours.
- But this morning, the pork cutout value surged $2.85 and movement improved to 209.5 loads.
- But expectations that a Chinese company's intention to buy Smithfield Foods will expand U.S. pork export opportunities remains an underlying source of support.