Market Snapshot, 10:00 am CT (VIP) -- August 12, 2013

August 12, 2013 05:10 AM
 

Corn futures are narrowly mixed in choppy, pre-report trade.

  • Corn futures got an early pop to start daytime trade from fresh demand news, but have since returned to mixed levels.
  • Early support came from news Mexico bought 252,153 MT of U.S. corn for 2013-14 delivery as it suggests prices are rebuilding demand.
  • But traders expect USDA to estimate the corn crop at a record 14.005 billion bu. in its first survey-based crop estimate this morning at 11:00 a.m. CT.
  • While traders look for USDA to trim old-crop carryover by around 5 million bu. from last month, new-crop carryover is expected to be rise by around 11 million bu. from last month to 1.97 billion bushels.
  • Traders also view recent weather as non-threatening, though overnight rains were more scattered than hoped and the driest areas of western and southern Iowa missed out on the precip.
  • But the National Weather Service 6- to 10-day outlook is less favorable as it calls for above-normal temps across the northern and western Corn Belt and below-normal precip for most of the region.
  • Gulf corn basis is up 14 cents for immediate delivery to stand 94 cents over September futures and is steady for new-crop delivery.

 

Soybean futures are 15 to 25 cents higher with new-crop leading gains.

  • Soybean futures have extended early gains to trade 20-plus cents higher in new-crop contracts, with August up around 15 cents.
  • News China purchased 713,000 MT of U.S. soybeans and an unknown destination purchased 140,000 MT of U.S. soybeans for 2013-14 is boosting new-crop futures. Combined, this is the fifth largest one-day soybean sale on record. This signals value buying is occurring.
  • Meanwhile, traders look for USDA to peg the crop at 3.336 billion bu., which is around 84 million bu. lower than last month's projection.
  • Traders also look for USDA to cut old-crop carryover by around 2 million bu. from last month and new-crop carryover by around 32 million bu. to 263 million bushels.
  • There is also some concern about the drier near-term forecast. The NWS forecast for Aug. 17-21 calls for below-normal precip across the Corn Belt.
  • Gulf soybean basis is 5 to 20 cents weaker for August delivery, but is up 4 to 5 cents for September delivery.

 

Wheat futures are favoring the upside in choppy trade this morning.

  • HRW, SRW and HRS futures are mildly firmer on pre-report short-covering.
  • While traders expect USDA to trim the size of the U.S. wheat crop by 8 million bu. from last month to 2.106 billion bu., traders are hesitant to actively cover short positions due to expectations for a global production recovery.
  • Traders look for USDA to trim U.S. carryover by 4 million bu. to 572 million bushels. Traders are especially interested to see what USDA does with its export forecast.
  • Gulf SRW basis is 4 to 5 cents weaker for nearby delivery this morning.

 

Live cattle futures are enjoying slight to moderate gains in early trade. Feeder cattle futures are slightly higher.

  • Traders are reacting to last week's higher cash cattle trade at $121 in the Southern Plains. Recent cash strength signals a seasonal low is in place.
  • As a result, traders are covering short positions in fall- and winter-month contracts.
  • But traders are still waiting on the boxed the beef market to join the rally. Retailers have been slow to pick up beef purchases despite the recent sharp price break.
  • Feeder cattle futures are mildly higher on spillover from live cattle. The corn market is providing limited price direction as futures are chopping around unchanged.

 

Lean hog futures are slightly to sharply higher in early trade.

  • Traders are covering short positions, especially in fall- and winter-month contracts. Nearby contracts are also benefiting from some technical buying after their gap higher open.
  • Cash hog bids are steady at most Midwest locations this morning.
  • Favorable cutting margins and building supplies are encouraging an uptick in hog processing as plants prepare for the upcoming Labor Day holiday.
  • Packers have near-term needs secured, though some may need more loads after mid-week.
  • Light support also stems from a 69-cent rise in the pork cutout value Friday, though movement was light at 261.6 loads.
  • In addition, the August contract remains at a slight discount to the cash hog index.
     
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