Corn prices are trading 8 cents lower early morning. Corn prices pulled back overnight as the market breaks after prices hit record levels over the past two months. The market will continue to see support as the drought worsens and crop conditions deteriorate. Traders are now focusing their attentions to yield projections and next week’s USDA supply/demand report.

Soybean futures are trading 11 to 19 cents lower early morning. Soybean futures tumbled along with the other grains overnight although the bullish sentiment of the market remains intact. Prices have risen dramatically in the corn and soy markets due to extreme drought conditions. Cooler and wetter forecasts for the Midwest next week are also pressuring prices, however the conclusion as the whether the crop is salvageable remains at a crossroad.

Wheat futures are trading 11 to 20 cents lower early morning. Wheat futures posted double digit losses along with the corn and soybean markets. As of this writing the U.S. dollar index is higher, but any downturn in the index should lend support to the wheat market. Global wheat production remains a concern and global reductions seem to roll in almost daily. Traders will also keep an eye out for any indications of a Russian export ban, although government officials (Russian) seem to be down playing the idea.

Live cattle are called to open mixed this morning. Moderately higher beef prices and expectations of higher cash market prices are expected to support prices on the open. On the other hand, the drawback in the corn market will weigh on deferred contracts. Similar to last week, the gap between packer bids and asking prices remains wide and may slow cash trade as late as Friday.

Lean hogs are called to open higher this morning. After posting triple digit losses on yesterday the market is set to open higher backed by short covering and the cash index premium. However, the outlook for the remainder of 2012 remains bearish and will continue to apply resistance to any gains in the market. Concerning the cash trade, prices are called steady at best today.

Cotton futures are trading higher early morning. Cotton futures are higher this morning despite considerable drawbacks in the grain complex. Higher prices are also tied to declining crop conditions however; long term fundamentals (demand side) remain bearish.