Corn futures continue to favor the upside in mixed trade at midday.
- The retreat in dollar strength and return of risk appetite amid expressions of optimism regarding a fiscal cliff deal has encouraged some light buying in corn futures.
- But as fresh fundamental news is lacking for corn, buying and selling interest is largely limited to month-end position evening.
- News Japan's imports of U.S. corn are expected decline from 86% in 2011-12 to 57% this marketing year as the country plans to source 30% of its needs from Brazil is limiting buying interest as it is a reminder of demand destruction.
- But traders remain aware that already port congestion in Brazil has caused several Asian importers to turn to the U.S. for its needs.
- Meanwhile, dryness in southern Brazil and too much rain in Argentina remain sources of light support.
Soybean futures remain roughly 2 to 9 cents lower, with nearby contracts seeing the lightest losses.
- Traders continue to book light profits in soybeans after strong gains yesterday.
- But that is the extent of selling interest amid increasing signs that exporters see current prices as a value. USDA today announced a 290,000 MT soybean sale to China for 2012-13.
- Basis strength around the U.S. along with increasing chatter about low water levels on the Mississippi River and tight supplies also limit downside risk.
- A return of rainy weather in Argentina ups the odds unplanted corn acres will be switched to beans, though this also raises yield concerns.
- Gulf basis levels at midday are steady to a penny higher for near-term delivery.
Wheat futures continue to enjoy gains around 4 to 5 cents at all three locations.
- Wheat traders remain concerned about dryness on the U.S. Plains, which has resulted in the lowest fall crop condition rating on record.
- And while uncertainty regarding wheat exports ahead of the Dec. 1 export ban in Ukraine persists, the fact remains that supplies in Ukraine and elsewhere in the Black Sea region are dwindling.
- A surge in Gulf basis levels for SRW wheat signals shipping troubles due to low water levels on the Mississippi River.
Live cattle futures are mixed with a downside bias at midday while feeder cattle futures have pared early losses to trade just slightly lower.
- Uncertainty regarding this week's cash cattle trade is keeping live cattle futures choppy today. The front-month contract is trading in line with the top of last week's cash cattle trading range.
- While the boxed beef market is off to an unimpressive start, showlist estimates are down this week and supplies are expected to continue to tighten over the near- and long-term.
- This morning, Choice boxed beef cuts firmed 22 cents and Select cuts rose $1.51. Movement was also improved at 124 loads.
- Outside markets are mixed. The dollar index has reversed early gains and the stock market has moved into positive territory following remarks from key leaders signaling optimism about a fiscal cliff deal. Crude oil futures remain under pressure.
December lean hogs remain sharply higher, with deferred months slightly to moderately higher.
- Lean hog futures are benefiting from strength in both the cash and product markets.
- Yesterday, the pork cutout value surged $1.63 and movement was an impressive 194.13 loads. This improved packer profit margins.
- Stronger profit margins have made packers more willing to pay firmer prices for hogs as they gear up for the holiday season.
- In addition, USDA's latest inventory numbers projected slightly smaller slaughter-ready supplies for December and January. In addition, the seasonal trend is for tightening supplies to begin in the first quarter of the year, which is also supportive.