Market Snapshot, 10:00 a.m. CT -- (VIP) -- July 5, 2013

July 5, 2013 05:03 AM
 

Corn futures got off to a firmer start, but new-crop futures have since softened amid bull spreading. July is up 6 cents, while new-crop is mostly 6 cents lower.

  • Tight old-crop supplies and favorable weather are encouraging bull spreading today.
  • Mild, wet weather is expected for the Corn Belt over the next five days. And the NWS 6- to 10-day outlook calls for normal to below-normal temps for most of the Corn Belt and normal to above-normal precip. This is viewed as a non-threatening forecast.
  • The U.S. dollar index's moved to a three-year high today on better-than-expected jobs data and an uptick in the number of people seeking work as well as thin trading volume is also negative for commodity buying.
  • December corn futures are again testing a $4-handle, but thus far, tests of Tuesday's low of $4.96 1/2 have been met with buying interest.
  • But another daily sales of announcement for 120,000 MT of new-crop corn to unknown destinations reminds of tight carryover supplies and the fact that a long growing season is ahead for the 2013 crop.
  • Weekly export corn sales of 233,100 MT for 2012-13 and 81,400 MT for 2013-14, matched expectations but declined from week-ago.

 

Soybean futures are also split amid bull spreading with July up 6 cents, August 3 cents lower and new-crop mostly 7 to 10 cents lower.

  • Non-threatening weather along with sharp gains in the U.S. dollar index are pressuring new-crop beans.
  • But old-crop futures continue to benefit from supply concerns.
  • Weekly soybean sales of 120,600 MT for 2012-13 and 249,100 MT for 2013-14 were within expectations, but down from the week prior.
  • Strength in the dollar index is adding to weakness in new-crop contracts.
  • Gulf soybean basis firmed 1 cent for July delivery and 1 to 3 cents for September and October delivery, signaling some value buying may be occurring.

 

Wheat futures are mostly 1 to 4 cents lower in most contracts at all three locations, with the exception of the front-month contracts, which are favoring the upside.

  • Spillover from corn and soybeans and marked strength in the U.S. dollar index are giving bears the edge in the wheat market today.
  • Plus, the market is still subject to some hedge-related pressure as harvest progresses with variable results.
  • But pressure is being limited by recent signs of strong export demand.
  • Weekly export sales of 593,100 MT for 2013-14 with China as the lead buyer represents solid demand.
  • Plus, USDA announced a 120,000-MT SRW wheat sale to China for 2013-14, which follows a 360,000-MT SRW wheat sale to the country Wednesday.
  • This speaks to prices being at value levels as well as production issues in China.
  • Also limiting pressure is news South Korea has lifted its pan on U.S. wheat. However, Japan's ban on U.S. western white wheat remains in place.

 

Live cattle futures are facing light pressure this morning, while feeder cattle futures have firmed to post slight gains.

  • Cash cattle trade got underway Wednesday afternoon at $119 across the Southern Plains, which is down $1 from last week.
  • Sharp gains in the U.S. dollar index thanks to today's jobs data is adding pressure.
  • July live cattle futures are at nearly a $3 premium to this week's cash trade.
  • Pressure is being limited by improvement in the boxed beef market Wednesday. Choice cuts firmed 63 cents and Select rose $1.85 on solid movement of 182 loads.
  • Traders will be watching the product market closely for signs as to how beef demand will fare during the dog days of summer. Relatively mild temps could make more consumers willing to fire up the grill.
  • Weekly beef export sales declined from last week's impressive tally, but sales of 12,400 MT still represents solid overseas demand.
  • Feeder cattle futures are benefiting from weakness in the corn market.

 

Lean hog futures are enjoying slight gains this morning.

  • A sharp slide in the pork cutout market Wednesday resulted in a major decline in packer cutting margins. Margins went from double-digit in the black to just a few bucks above breakeven.
  • Nevertheless, tightening supplies and some packers' needs for additional loads this weekend are expected to result in some firmer cash hog bids today. This morning, bids are mostly steady.
  • Weekly pork export sales fell from the previous week's strong tally, but sales of 10,000 MT still indicate solid export demand.
  • July lean hogs are still at around a $1 discount to the cash hog index, while August futures are nearly $6 below the index. This is also supporting nearby contracts.
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