Corn futures are expected to open mixed on Tuesday. Old crop prices were a little higher overnight while new crop prices were generally lower. USDA released the first Crop Progress report of the year and the data showed that farmers had planted 3 percent of this year’s corn crop as of Sunday. This is 1 percentage point higher than the average pace for the beginning of April. Commercial buying continues to support old crop futures, suggesting pretty strong current demand. The basis is also strong versus the May contract.
Soybean futures are called 4 to 7 cents lower on Tuesday. The May and the November contracts hit new highs on Monday with strong underlying market fundamentals. Chinese demand is strong as that country rebuilds stocks. Technically the market is considered to be over-bought but so far market fundamentals have trumped the technical factors. Still prices are expected to start the day a little lower following the big gains on Friday and Monday.
Wheat prices are called 5 to 10 cents lower on Tuesday. USDA’s Crop Progress report showed the condition of the winter wheat crop much better than was the case at this point last year. Nearly 60 percent of this year’s crop is rated good or excellent compared to 37 percent of the crop in these categories in 2011.
Cattle prices are expected to open 10 cents to 40 cents higher. The nearby futures contract remains far below cash cattle prices and that is the main factor pulling futures prices up. But the cash cattle market may be in trouble too. There are some signs that market ready cattle are backing up in feedlots with weights far above year ago levels. Packer margins are very negative and some reduction in cash cattle prices may be inevitable. Preliminary data indicates a sizable drop in feedlot placements in March which could have an impact on late summer supplies.
Hog futures are called 10 cents to 40 cents higher on Tuesday. The cutout value increased again on Monday which will feed the growing optimism in the trade that hog and pork prices are finally ready to move higher. Hog futures posted big gains on Monday and there is expected to be some follow-up buying early in the session on Tuesday. But cash market fundamentals are still poor. Cash hog prices declined again on Monday to a new low for the year.
Cotton prices are expected to open mostly lower on Tuesday. Drought conditions continue through most of the cotton growing region, but in general conditions are better than they were early in the season last year. The somewhat better conditions at the start of the season coupled with higher than expected planted acreage are keeping some pressure on cotton prices. The generally weak demand side of the equation is another factor affecting the outlook for cotton.
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