Corn futures are 9 to 13 cents higher in old-crop contracts and around 1 cent higher in new-crop contracts.
- Commercials are reportedly active buyers this morning of old-crop corn, which reflects a tight supply situation and keeps USDA’s January reports on traders’ minds.
- USDA lowered 2012-13 carryover to a very tight 602 million bu. on Friday and corn futures reacted with strong (although not limit) gains.
- Nearby corn futures have eased off earlier highs, but a high-range close today would strongly suggest a near-term low has been posted.
- Gulf corn basis is 2 to 3 cents lower for nearby delivery, which reflects soft export demand.
Soybean futures are 7 to 19 cents higher, with old-crop leading gains on concerns about Brazilian weather.
- Soybean futures are higher this morning after Friday’s weaker close due to concerns about a drier near-term forecast in areas of Brazil.
- Also supportive this morning is news China purchased 120,000 MT of U.S. soybeans for 2012-13, which follows a flurry of fresh export news last week from China and unknown destinations. This strongly suggests U.S. prices are a “value.”
- NOPA reports December soybean crush of 159.9 million bu., which is around 1 million bu. below the average guess. But this is still up from 157.3 million bu. the previous month. Soyoil stocks of 2.6 billion lbs. were in line with pre-report expectations.
- Gulf soybean basis is steady to 5 cents higher for March delivery and is $1.07 above March futures for immediate delivery.
Chicago and Kansas City wheat are posting double-digit gains, with Minneapolis up mostly 7 to 10 cents.
- Wheat is enjoying spillover from corn, as well as followthrough from Friday’s gains.
- Traders will have Friday’s USDA reports on their minds, as USDA trimmed 2012-13 carryover more than expected to reflect stronger-than-expected demand.
- Traders are also noting concerns about freeze damage to Russian wheat, although there is snow in the near-term forecast which would provide insulation against frigid temps. One Russian agency says up to 25% of the crop could be impacted by winterkill.
- Wheat futures are pivoting around resistance at Friday’s high. A high-range close would strongly suggest near-term lows have been secured.
Live cattle futures are called steady to weaker as traders narrow the premium nearby contracts hold to the cash market.
- February live cattle futures are trading at around a $4 premium to last week’s mostly $126 cash cattle trade, which raises the risk of followthrough from last week’s losses.
- But pressure should be limited has traders have a bullish attitude toward the market this year due to the tight supply situation.
- Last week’s cash cattle trade was termed “moderate” in terms of volume, which means showlists should be tighter this week compared to recent weeks.
- Strength in the corn market this morning is expected to weigh on feeder cattle futures.
Lean hog futures are called mixed as traders get a handle on this week’s cash tone.
- The cash hog market is expected to start the week mostly steady as packers gauge this week’s supplies against demand.
- Packers saw profit margins improve last week, but they are still cutting slightly in the red, which makes them hesitant to raise bids.
- February lean hog futures are trading in line with the cash index, which could limit near-term downside risk unless the pork cutout market weakens.
