Market Snapshot, 10:00 a.m. CT -- (VIP) -- July 8, 2013

July 8, 2013 05:00 AM
 

New-crop corn futures extended overnight gains on fresh demand news.

  • New-crop corn futures extended overnight gains on news that Mexico has purchased 120,000 MT of new-crop corn. Given recent strength in the dollar index, the news signals corn prices have returned to a level that attracts demand.
  • Corn is also seeing a boost from ideas Friday's losses were done in new-crop contracts, although December corn has its work cut out in order to signal near-term lows have been posted.
  • December corn opened under light pressure overnight, but gradually turned higher and are currently pivoting around the key $5.00 level.
  • Meanwhile, traders view the near-term forecast as non-threatening as a cold front is expected to bring a return to normal temps by midweek and there's rain moving across the central Corn Belt this morning.

 

Soybean futures are posting double-digit gains of around 12 cents in most contracts.

  • Soybean futures extended overnight gains with the start of daytime trade due to short-covering and fresh demand news.
  • USDA announced an unknown buyer purchased 135,000 MT of soybeans and China purchased 120,000 MT -- all for 2013-14. This signals new-crop prices are at value levels.
  • November soybean futures gapped lower to start the overnight session to do more near-term technical chart damage and are currently pivoting around $12.40. The contract remains in its downtrending channel.
  • Rains moving across the central Corn Belt this morning are being ignored by the market as traders even positions. But the non-threatening near-term weather forecast is limiting buying.

 

Wheat futures are mostly 4 to 7 cents higher on short-covering and fresh demand news.

  • Wheat futures at all three exchanges are being supported by short-covering and fresh demand news.
  • On top of large purchases announced last week, USDA announced this morning that China purchased 840,000 MT SRW wheat for 2013-14. Given recent strength in the U.S. dollar index, these purchases signal U.S. prices have returned to value levels.
  • A pickup in demand for U.S. wheat comes when the bulk of harvest-related hedge pressure should be behind the market.
  • Also positive for wheat futures is news this morning that Japan plans to resume purchases of U.S. western white wheat sometime in August.
  • The Institute for Agricultural Market Studies (IKAR) has cut its Russian wheat forecast due to dry weather across key production regions from 54 MMT to 52.4 MMT.
  • Still, wheat futures have a lot of work ahead in order to signal near-term lows have been posted.

 

As expected, live cattle futures opened mixed, with nearbys firmer.

  • Live cattle futures started the week choppy as traders wait on clues from the boxed beef market about weekend holiday beef clearance.
  • Traders are cautiously optimistic that beef demand was strong over the weekend. But if movement was light and prices start the week under pressure, it will be difficult for bulls to maintain their footing.
  • Traders are also hesitant to extend long positions after last week's light cash cattle trade, which came in $1 lower than the previous week at $119.
  • This week's showlist is expected to be up slightly from last week as many feedlots carried supplies over, raising concerns about lots becoming backed up.

 

Lean hog futures got off to a choppy start but have turned slightly lower.

  • Hog futures have softened as traders wait on indications of weekend pork clearance.
  • The cash hog market is mostly steady to firmer as many plants are short bought following the holiday and need supplies for early week delivery.
  • But key for building on cash firmness will be if the pork market shows strength early this week given the fact packers' profit margins have tightened.
  • July lean hog futures are trading at around a $1 discount to the cash index, while August hogs will soon be the lead-month contract and hold a steeper $6 discount to the index.
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