Market Snapshot, 10:00 a.m. CT -- (VIP) -- August 19, 2013

August 19, 2013 05:00 AM
 

Corn futures have extended overnight gains to trade mostly 10 to 15 cents higher.

  • Traders are focused on weather to start the week as drought is expanding in the western Corn Belt into Illinois and a dry weekend and building heat in the Corn Belt this week may cause tip back and draw down yields.
  • The National Weather Service 6- to 10-day outlook calls for above-normal temps across the Midwest and above-normal precip across the northern Corn Belt and the Dakotas.
  • Traders will receive an update on the condition of the U.S. corn crop from USDA this afternoon. Pre-report expectations are for the rating of the corn crop to fall 1 point to 63% "good" to "excellent."
  • Corn is also benefiting from some technical buying after the December contract moved above the 20-day moving average for the first time since mid-June.
  • Traders are also keeping an eye on reports from the Pro Farmer Midwest Crop Tour. Scouts on the eastern and western legs of the tour began gathering samples this morning. Final results from Ohio and South Dakota will be released tonight.
  • A recent uptick in export demand is also supportive, though a 5-cent slide in Gulf basis for immediate delivery this morning signals increased farmer sales.

 

Soybean futures are enjoying gains in the 20s to 30s through the March contract.

  • Forecast for heat in the Midwest this week and the next is lifting soybeans this morning. The precip outlook is varied. This is concerning as much of the bean crop will be filling pods during this time.
  • Traders are also keeping an eye on data from the Pro Farmer Midwest Crop Tour, as scouts began taking samples on the western and eastern legs of the Tour this morning. Final results from Ohio and South Dakota will be released tonight.
  • Traders will also receive an update on the condition of the soybean crop from USDA this afternoon. The market expects a 1 percentage point decrease in the amount of soybeans rated "good" to "excellent" to 63%.
  • Soybeans have also seen some technical buying interest as September beans moved through the key $13.00 level this morning, while November and January beans are testing this level.

 

Wheat futures 7 to 10 cents higher for SRW wheat, while HRW and HRS wheat is roughly 4 to 7 cents higher.

  • Wheat futures are taking their cue from the corn market this morning.
  • Otherwise, support is limited as global wheat supplies are ample.
  • The U.S. is thought to be losing out on export business to places such as the Black Sea region that offer wheat at lower prices.
  • Reminding of this is news French analyst Agritel expects the country's soft wheat crop to be the largest in nine years at 37 MMT. That's above the farm ministry's peg of 36.1 MMT.
  • Harvest-related hedge pressure is also limiting buying interest in spring wheat. This will likely remain the case until half the crop is harvested. USDA will provide an update on harvest progress this afternoon.

 

Live cattle futures are posting slight losses this morning. Feeder cattle futures are mixed with a downside bias.

  • Pressure on live cattle futures is being limited by Friday's $2 higher cash cattle trade on the Southern Plains, as traders expected $1 higher trade.
  • But with futures already at a $1 premium to last week's $123 cash cattle trade, traders are taking a cautious approach.
  • Cash and futures markets typically rise seasonally this time of the year.
  • Choice and Select cuts firmed $1.09 and 68 cents on Friday, respectively, but movement slowed to just 130 loads. This raises concerns about consumer resistance to high boxed beef prices.
  • Uncertainty about how the temporary halt of sales of the feed additive Zilmax will play out is also limiting buying enthusiasm.
  • Strength in the corn market is pressuring feeder cattle futures this morning.

 

Lean hog futures are posting slight losses in most contracts this morning.

  • With Labor Day buying winding down and hog supplies building with the approach of August, the path of least resistance for the hog market is down.
  • Heavier supplies are resulting in steady to lower cash cash hog bids today, despite wide profit margins. Most are well supplied on near-term needs.
  • A $1.27 jump in the pork cutout value added to strong margins. The gains slowed movement to 286.2 loads, however.
  • The closing of last week's big upside gap either today or in some cases on Friday is setting the stage for some technically based profit-taking as well.
  • Pressure on nearby contracts is being limited by the wide discount the October contract maintains to the cash hog index.
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