Market Snapshot, 10:00 a.m. CT -- (VIP) -- August 28, 2013

August 28, 2013 05:01 AM
 

Corn futures are 4 cents higher in the front-month, while new-crop futures have trimmed early losses to trade 1 to 3 cents lower.

  • Strength in the U.S. dollar index and uncertainty as to how much upside is left in any weather rally is encouraging light profit-taking in the corn market. Funds added to their short positions again yesterday.
  • Meanwhile, temps are expected to remain high through this week and into the next, while just scattered showers are in the forecast for central and eastern areas of the Corn Belt this weekend. Next week is expected to be dry for most of the Belt.
  • There is also talk that South Korea will increase its new-crop corn purchases.
  • But Gulf corn basis for immediate delivery is down a dime, signaling a softening of demand and/or increased farmer sales.
  • Weekly ethanol production of 820,000 barrels per day (bpd) was down 24,000 bpd from the week prior. Ethanol stocks fell 232,000 barrels to 16.25 million barrels.

 

Soybean futures saw choppy trade on the open, but futures have since improved to trade 3 to 9 cents higher.

  • Traders remain unwilling to push soybeans lower considering current hot, dry conditions across the Midwest and the forecast for more of the same to start September. Current stress is pulling down the crop's yield potential.
  • This is encouraging private crop watchers, such as crop consultant Dr. Michael Cordonnier and Lanworth, to lower their yield and production projections.
  • News China bought 120,000 MT of soybeans for 2013-14 delivery also helped shift some traders from profit-taking to bargain buying mode.
  • A 5-cent slide in Gulf basis for August and early September delivery signals recent gains have encouraged some farmer sales.

 

Wheat futures are mixed in the SRW market, while HRW wheat is 2 to 3 cents higher and HRS wheat is up 3 to 7 cents.

  • USDA's announcement that unknown destinations bought 119,000 MT of U.S. wheat is lifting wheat futures as it reminds of solid demand.
  • But buying enthusiasm in Chicago is being limited by spillover from the corn market and strength in the U.S. dollar index.
  • Also, news Toepher International expects Germany's wheat crop to rise 8.3% from last year reminds of ample global supplies.
  • Meanwhile, concerns about a slow spring wheat harvest pace are helping HRS wheat to lead the complex higher.

 

Live cattle futures are off to a slightly higher start. Feeder cattle futures are slightly to moderately higher.

  • Improvement in boxed beef prices yesterday is encouraging some light short-covering today. However, movement was again light, keeping demand in mind.
  • But otherwise, buying interest is being limited by cash cattle trade uncertainty. Bids are at $121 in Kansas, which is down $2 from the bulk of last week's trade. Feedlots, meanwhile, are asking $125 to $126. The wide spread between bid and asking prices signals late-week trade is likely.
  • While showlist estimates are up this week as feedlots did not clear out supplies last week, supplies are expected to tighten heading into fall and in the year-ahead. This will continue to limit selling interest in futures.
  • Softer corn prices are encouraging additional short-covering in feeder cattle futures after Monday's steep decline. Tempering gains are strong gains in the U.S. dollar index.

 

Lean hog futures are posting slight losses this morning.

  • Traders are taking advantage of yesterday's gains and strength in the U.S. dollar index by booking some profits.
  • Adding light pressure are expectations for demand to fade and supplies to rise in the weeks ahead.
  • But average hog weights in Iowa and southern Minnesota the week ended Aug. 24 fell 0.4 lbs. from the week prior and Midwest heat is thought to be stressing animals again this week.
  • Early cash hog bids are mostly steady, and mixed bids are expected today. Most plants are well supplied on near-term needs, but a few plants may have to raise bids to secure supplies since high temps are making some packers unwilling to transport hogs. Packers are still enjoying wide profit margins.
  • Also limiting selling interest is the discount nearby contracts still hold to the cash hog index.
  • The pork cutout value firmed 11 cents yesterday on improved movement of 357.5 loads.
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