Corn futures have traded up to their 40-cent limit higher in the December through July contracts; farther deferred months are 20-plus cents higher.
- True to form, USDA delivered a "September surprise" in this morning's Quarterly Grain Stocks Report, but this time it favored market bulls.
- USDA set old-crop carryover at 988 million bu., which is 138 million bu. below pre-report trade expectations and down 12% from Sept. 1, 2011 stocks.
- Also providing corn a boost are ideas hedge pressure will soon ease as harvest likely moved past the halfway point this week.
- The market is also benefiting from heightened global supply concerns. The International Grain Council has lowered its global corn carryover estimate for 2012-13 from last month by 2 million metric tons (MMT) to 118 MMT.
- A Mediafax story cited Romania's ag minister as saying the country's corn production is expected to be down 60% this year to 4.7 MMT.
Soybean futures have rallied to trade 20-plus cents higher in most contracts.
- Soybean traders have shook off a higher-than-expected 169 million bu. 2011-12 carryover estimate this morning, and are instead focusing on the need to ration use.
- Adding to such ideas was USDA's announcement China bought 180,000 metric tons (MT) of soybeans for 2012-13. This is the third consecutive daily soybean sale announcement this week -- two to China and one to "unknown destinations" for a total of 430,000 MT.
- Spillover from corn and steady to firmer Gulf basis levels are adding light support.
Wheat futures at all three exchanges have surged to post gains in the 20s to 40s with nearby contracts leading to the upside.
- Wheat is benefiting from spillover from corn and bullish report data this morning.
- USDA's Quarterly Grain Stocks Report showed all wheat stocks tighter than expected at 2.104 billion bu., which was below the average trade guess of 2.281 billion bushels. This signals feed-wheat usage has been stronger than expected and adds to concerns about tightening global wheat stocks.
- Persistent rains during winter wheat harvest in the UK have sparked quality concerns, although rains in the U.S. Southern Plains are propelling planting in the region.
- The Small Grains Summary was given a neutral read by the market as USDA's all wheat crop estimate of 2.269 billion bu. was in line with expectations.
- The International Grain Council has lowered its global 2012-13 carryover projection by 5 MMT from last month to 175 MMT due to cuts in the global crop.
Live cattle futures remain moderately lower, while feeder cattle futures have extended heavy losses, with some contracts now trading their $3.00 limit lower.
- Weakness in live cattle futures today signals traders expect more weakness ahead for the cash cattle market after sharply lower trade ranging from $120 to $123 this week.
- But this could change if recent strong boxed beef movement helps the beef market to put in a near-term low. That is not the case today, however, as Choice and Select cuts plummeted $2.74 and $2.26 on decent movement of 99 loads.
- Dollar strength and signs of a weak global economy is also making traders hesitant to add long livestock positions.
- Limit-higher trade in corn has translated to sharp to limit-lower losses in feeder cattle.
Lean hog futures have improved to post slight to moderate gains, with deferred months leading to the upside.
- Profitable packer profit margins have helped the market work through the supply glut caused by high feed costs and active sow liquidation and kept the cash market trending steady to higher. This makes traders optimistic as they ready positions for month- and quarter-end.
- Cash hog bids are mostly steady today as narrower profit margins are expected to encourage some to trim kill hours next week. The cash hog index was most recently projected at $75.08.
- And the pork market has also been on the rise, which should continue to support the cash and futures markets.
- Traders are also evening positions ahead of this afternoon's Quarterly Hogs & Pigs Report. Pre-report expectations are for it to show All Hogs & Pigs at 100.7% of year-ago, Kept for Breeding at 99.8% and Kept for Marketing at 100.8% of last year.