Corn futures are currently favoring the downside in narrowly mixed trade.
Traders are focused on evening positions ahead of USDA’s Crop Production and Supply & Demand Reports tomorrow. USDA is expected to slash its production and carryover estimates from last month.
Harvest-related hedge pressure is also weighing on the market. This will build until half the crop has been harvested. As of Sunday, USDA says harvest is 15% complete.
Selling pressure is being limited by sharply higher Gulf basis levels for immediate delivery both this morning and at midday. This signals limited supply availability.
Soybean futures continue to see losses of 7 to 11 cents, with meal and soyoil seeing spillover pressure.
Traders are reducing their risk exposure ahead of tomorrow morning’s key USDA reports. While these are expected to show production of just 2.638 billion bu. and 2012-13 carryover of just 106 million bu., the September Crop Production Report has held surprises in the past and traders are wary funds will have a sell-the-fact reaction to the report.
Yesterday’s Crop Progress and Condition Report is an additional source of light pressure. It showed a slight improvement in bean crop ratings and that harvest is 4% complete.
Selling is being limited by firmer Gulf basis levels at midday, which point to strong demand and/or tight supplies.
Wheat futures have softened to post slight losses in Chicago, while Kansas City and Minneapolis wheat are choppy, with Minneapolis favoring the upside.
A pullback in the corn market has led to a similar decline in Chicago wheat futures.
Light pressure also comes from news Egypt again favored cheaper alternatives to U.S. supplies in its recent tender for 55,000 MT of Ukrainian wheat, 120,000 MT of French wheat and 60,000 MT of Russian wheat.
Rains in the forecast for the U.S. Central and Southern Plains would improve winter wheat planting prospects.
But pressure is being limited by ongoing concerns about global wheat supplies. Today ABARES lowered its wheat crop estimate to around 22.5 million metric tons (MT).
Also, the Australian Bureau of Meteorology says tropical Pacific Ocean sea surface temperatures are near El Nino thresholds, which could signal below-average spring rainfall for the country.
Live cattle futures have strengthened to post slight to sharp gains with nearbys leading to the upside. Feeder cattle futures have improved to post slight to moderate gains.
Sharp losses in the U.S. dollar index and concerns that the poor pasture conditions and high feed costs have tightened supplies even more than what was expected earlier this year have encouraged cattle buying today.
Plus, tighter showlist estimates could give feedlots some leverage in cash cattle negotiations.
On the other hand, some packers are cutting in the red and recent mixed boxed beef prices could make packers very reluctant to raise bids.
Feeder cattle futures are benefiting from softer corn prices, though gains are being limited by uncertainty about grain traders’ potential reaction to Wednesday’s key reports.
Lean hog futures are posting slight to moderate losses in all but the October contract, which is slightly higher.
The front-month is benefiting from short-covering encouraged by ideas a seasonal low is near and a sharply lower dollar. The October contract currently holds a slight premium to the cash hog index.
But the rest of the market continues to struggle under the burden of heavy supplies.
Cash hog bids are steady to lower again today as supplies are readily available.
Softer pork prices have encouraged strong movement. Already this morning, 18.25 loads have changed hands.
