July corn has softened slightly to post gains around 3 cents, while new-crop futures have improved to post gains of 9 to 10 cents.
- The corn market is seeing some light bull spread unwinding ahead of midday.
- Slow development of the U.S. corn crop raises concerns about its eventual yields and the potential for the 2013-14 crop to make up for last season's shortfall. This is supporting new-crop futures today.
- The forecast for rainy weather this week and the next adds to concerns about the condition of the crop.
- Meanwhile, basis levels at interior locations are on the rise as supplies are tight and profitable blending margins are encouraging plants to pick up production.
- A 10-cent surge in Gulf basis for immediate delivery and a 1- to 5-cent rise for August delivery signals export demand may also be improving.
Soybean futures are mostly 4 to 9 cents higher at midday with old-crop contracts leading gains.
- Both supply and demand news favors market bears today.
- USDA's crop progress update yesterday revealed that around 11.6 million intended soybean acres were unplanted as of Sunday.
- Farmers will likely take advantage of a brief spell of warm, dry weather to start the week, but then more rain is expected to move into the upper Midwest. Above-normal precip is expected over the 6- to 10-day outlook, as well.
- New-crop contracts are also benefiting from USDA's announcement China purchased 240,000 MT of new-crop soybeans.
- Gulf basis firmed 2 to 5 cents for August delivery and was steady for other months at midday. This could signal some improvement in export demand.
Wheat futures have trimmed early gains to trade around 3 to 4 cents higher in Chicago and Kansas City, with Minneapolis wheat fractionally to a penny higher.
- Spillover from corn and soybeans is giving bulls the advantage in the wheat market, though the market has seen some light profit-taking.
- Harvest is underway in winter wheat country. While early results in Texas and Oklahoma are reportedly poor and the pace of harvest is well behind average (11% complete as of Sunday), harvest-related hedge pressure will continue to limit the market's upside.
- Spring wheat planting and development is also still lagging the average pace -- especially in the No. 1 production state of North Dakota. This continues to support Minneapolis wheat.
- Despite USDA's comments that the GMO wheat finding was an isolated incident, South Korea and Japan continue to ban U.S. western white wheat.
Live cattle futures opened under pressure, but the market has since improved to mixed trade. Feeder cattle futures have also improved to choppy trade.
- Early losses in the live and feeder cattle markets has brought some short-covering interest back to the market amid ideas live cattle have put in a bottom. However, the seasonal pattern would indicate that a low may not come until July.
- Last week, cash trade took place at lower prices mostly around $120 on the Southern Plains and at $121 to $122 in northern locations.
- This morning, Choice boxed beef cuts fell 53 cents, while Select firmed $1.16. Movement improved to 104 loads.
- But this week's cattle showlist is up sharply from last week after supplies were carried over the past two weeks.
- Outside markets are also friendly toward commodity buying as the stock market is enjoying solid gains, while the greenback is under pressure. Spillover from lean hogs also helps to give bulls an edge.
Lean hog futures are enjoying slight to moderate gains ahead of midday, with nearbys leading to the upside.
- Lean hog futures are benefiting from unexpected strength in the cash hog market today. Bids are steady to higher today, signaling greater demand for supplies than earlier thought and reminding of tight supplies.
- Also, the July lean hog contract is at $4-plus discount to the cash hog index, most recently projected at $103.28.
- Adding to the bullish tone, the pork cutout value firmed $1.08 and movement was strong at 196.1 loads this morning.
- This should help keep newly positive packer profit margins in the black.