Market Snapshot, 10:00 a.m. CT -- (VIP) -- August 13, 2013

August 13, 2013 04:57 AM

Corn futures have chopped on either side of unchanged this morning. Currently, bears have the reins and futures are 4 to 6 cents lower.

  • Corn traders have oscillated between followthrough buying and profit-taking this morning following USDA's friendly reports yesterday.
  • But while USDA's corn crop estimate came in well below expectations, if USDA's estimate is realized, this would still be the largest corn crop on record. This along with strength in the U.S. dollar index have encouraged profit-taking.
  • Recent signs bargain buying among exporters is underway along with the drawdown in USDA's old-crop carryover estimate is keeping selling interest in check.
  • While recent cool weather has limited damage to the corn crop during pollination, it has also slowed development. As of Sunday, 32% of the crop was in the dough stage and 5% of the crop was dented, compared to the five-year average paces of 48% and 17%, respectively.
  • The National Weather Service Forecast for Aug. 18-22 raises some concern about crop damage ahead as the dry western Corn Belt is expected to see below-normal precip and above-normal temps.

Soybean futures have seen choppy trade this morning. Currently, most contracts have pared gains to trade fractionally to 2 cents higher.

  • Soybean futures continue to benefit from USDA's lower-than-expected soybean crop estimate of 3.255 billion bushels. But recognition that this still represents a major rebound in production as well as strength in the U.S. dollar index have encouraged bouts of profit-taking.
  • Also giving bulls a slight advantage in the bean market is the technically improved posture of the market.
  • Traders still have yesterday's large daily sales announcements that totaled 853,000 MT in mind, as this signals value buying is underway among exporters.
  • Light support also stems from a slight decline our weighted Crop Condition Index.
  • Plus, the NWS 6 to 10-day outlook calls for above normal temps in the northern and western Midwest, while below-normal precip is expected for much of the central and western Corn Belt, adding to dryness concerns in western areas of the Corn Belt.

SRW and HRW wheat are posting losses of 1 to 3 cents this morning, while HRS wheat is narrowly mixed.

  • Choppy to lower trade in the corn market is making it tough for wheat to find buyers.
  • Strength in the U.S. dollar index also adds to concerns about the competitiveness of U.S. wheat export prices. USDA yesterday raised its global wheat crop estimate to 172.99 MMT, also fueling such concerns.
  • Other Supply & Demand and Crop Production data for wheat yesterday was given a largely neutral to friendly read.
  • FranceAgriMer increased its estimate of its wheat crop slightly to 36 MMT, which is up from 35.6 MMT last season.
  • UkrAgroConsult raised its grain crop forecast by 1.9 MMT to 53.83 MMT, with wheat production expected at 20.69 MMT.
  • While the condition of the spring wheat crop declined slightly last week, harvest has begun with 6% now cut. Traders expect harvest-related hedge pressure to build soon.

Live and feeder cattle futures are enjoying slight gains in most contracts this morning.

  • Traders are growing increasingly confident that the cattle market has put in a near-term low and will rally around tightening supplies and improved beef demand going forward.
  • Yesterday, Choice boxed beef values rose $1.29 and Select firmed 85 cents. Movement also picked up notably to 182 loads, signaling some Labor Day buying is taking place.
  • Showlist estimates are tighter at all locations this week. This points to at least steady and likely firmer cash trade if the boxed beef market continues to improve.
  • Light support also comes from news JBS and National Beef Packing Co. will continue to buy cattle finished with Zilmax and other beta-agonists. Tyson Foods shook the market last week with its announcement it will stop buying cattle finished with Zilmax Sept. 6.
  • Live cattle futures are also enjoying some technical buying after yesterday's strong finish.
  • Tightening calf supplies and spillover from live cattle are supporting feeder cattle futures. Also, USDA still expects a record-large corn crop, which is easing concerns about feed availability.

Lean hog futures are split amid bull spreading, with 2013 contracts slightly higher and deferred months slightly lower.

  • Nearby contracts remain at a discount (a steep one for the October contract) to the cash hog index, which is providing light support.
  • But the rest of the market is seeing some light profit-taking after yesterday's solid gains and amid strength in the U.S. dollar index.
  • And while positive cutting margins are encouraging packers to increase slaughter runs, building supplies are expected to weigh on the market going forward, especially once Labor Day buying concludes. Cash hog bids are mostly steady today.
  • Also encouraging some profit-taking is a $1.16-decline in the pork cutout value and light movement of 256.3 loads yesterday.
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