Market Snapshot, 10:00 a.m. CT -- (VIP) -- August 26, 2013

August 26, 2013 05:00 AM
 

Corn futures are up 17 to 25 cents this morning.

  • Weather concerns are pushing corn higher this morning. The Corn Belt is expected to see near-record temps this week and a heat dome is expected to keep precip out of the Belt.
  • This is especially concerning considering that drought was already in effect for much of this region and scouts on the Pro Farmer Midwest Crop Tour last week already noted yield-limiting tipback in many states.
  • Hot temps are expected to continue over the 6- to 10-day outlook, though there are above-normal rain chances for parts of the northern and eastern Corn Belt.
  • Meanwhile, tight old-crop supplies have kept basis levels around the country at elevated levels, especially since there have been signs of improved export demand. Gulf basis is steady this morning.

 

Soybean futures are enjoying gains in the 30s to the 60s this morning, with nearbys leading the charge.

  • Stressful weather in effect for the Corn Belt that is expected to continue over the next 10 days is causing soybeans to surge this morning.
  • Adding to such concerns was Pro Farmer's estimate of a lackluster soybean crop that we expect to average 41.8 bu. per acre for a crop of 3.158 billion bushels. We said that this is assuming normal weather through September, which would be about perfect for the crop. But current conditions are far from ideal for the pod setting and filling crop.
  • USDA will provide an update on the condition of the soybean crop this afternoon.
  • Basis strength around the country is also telling of tight old-crop supplies and improving export demand.
  • Soybean futures are also benefiting from technical buying interest as futures have surged through near-term levels of resistance.

 

Wheat futures are posting gains in the 20s for SRW wheat, while HRW is 18 to 22 cents higher and HRS wheat is posting gains in the teens.

  • Spillover support from corn and soybeans is lifting the wheat market today. Ideas the downside has been overdone are also supportive.
  • Traders are also looking ahead to the weekly export inspections report to be released at 10:00 a.m. CT. Recent reports have signaled strong demand for U.S. wheat, despite concerns about stepped up competition overseas.
  • Buying enthusiasm in the HRS market is being curbed by ongoing spring wheat harvest. The market will receive a progress update from USDA this afternoon.
  • Gulf basis firmed 1 to 3 cents for August and September delivery this morning.

 

Live cattle futures are moderately higher this morning. Feeder cattle futures got off to a mixed start.

  • Friday's Cattle on Feed Report came in on the bullish side of expectations for all categories, with Placements well below expectations.
  • This signals supplies are still dwindling and that the market is on pace to hit a 10-year cycle high in 2014.
  • Light cash cattle trade took place at mostly steady prices on the Southern Plains Friday at $123, while northern locations saw $1 to $2 lower prices.
  • Traders will watch showlist estimates and boxed beef performance for clues as to this week's cash prospects. Light trade last week signals showlist could be heavier this week.
  • On Friday, Choice beef values were up 35 cents but Select fell $1.19 and movement was light at 153 loads.
  • Strong gains in the corn market are encouraging light profit-taking in feeder cattle futures at times, but spillover from live cattle is giving bulls a slight advantage.

 

Lean hog futures are slightly to moderately higher this morning.

  • Some lean hog contracts are seeing some technical buying after Friday's bullish reversal and amid ideas the downside was overdone last week.
  • Also, temps in the 90s are forecast throughout the week for the Corn Belt, which could limit hog weight gain and make producers reluctant to market animals.
  • But most packers are well supplied for near-term needs. Therefore, early cash hog bids are steady to lower.
  • Nearby contracts are also benefiting from the steep discount they hold to the cash hog index to start the week.
  • Traders are also encouraged by Friday's 94-cent gain in the pork cutout market, which lifted packers' profit margins. However, this slowed movement to just 253.5 loads.
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