Market Snapshot, 10:00 am CT (VIP) -- August 14, 2013

August 14, 2013 05:12 AM
 

Corn futures are 3 to 8 cents higher this morning with the September contract leading gains.

  • Corn futures are benefiting from some bargain buying this morning amid ideas the downside was overdone yesterday.
  • And while the market and USDA expect production to rebound this season, dryness in the western Corn Belt is getting a bit more concern of late. There are some near-term chances for scattered rains in this region, but the 6- to 10-day outlook calls for below-normal precip for this region.
  • Light support also comes from news U.S. weekly ethanol production rose 4,000 barrels per day (bpd) to 857,000 bpd over the past week. Weekly ethanol stocks declined 291,000 barrels to 16.43 million barrels.
  • Gulf basis is steady to a penny higher this morning, signaling tight supplies and possibly fresh export demand news may be ahead.
  • Basis at interior locations is steady to sharply higher as end-users are having trouble securing limited supplies. Dryness in the western Belt are also making farmers unwilling to market new-crop supplies.

 

Soybean futures faced pressure overnight and early this morning, but the market has since rebounded to trade 7 to 11 cents higher.

  • Early profit-taking pressure has given way to a fresh wave of buying.
  • USDA's announcement China purchased 110,000 MT of soybeans for 2013-14 delivery reminds the market that end-users see current prices as a value.
  • Also, forecasts for below-normal precip for the western Corn Belt next week and above-normal temps for the northern Midwest are also providing support as some of the bean crop will be setting and filling pods at that time.
  • A firmer start in corn and a weaker dollar are allowing soybeans to work higher.

 

The wheat complex if off to a lower start, with SRW and HRW down 1 to 4 cents and HRS mixed with a downside bias.

  • Wheat futures are seeing followthrough selling today as the market staged a poor technical finish yesterday.
  • There is increasing concern that U.S. wheat will lose export business to the Black Sea region as prices are lower there.
  • Gulf SRW wheat basis is steady for immediate delivery and down 5 cents for early September delivery to reflect increased global competition. This idea has yet to be reflected by weekly export sales reports, however.
  • Also, harvest pressure is imminent as spring wheat harvest was 6% complete as of Sunday.
  • Russia's ag ministry has trimmed the country's grain crop estimate to say it will not exceed 90 MMT, which is down from a range of 90 MMT to 94 MMT. This is still a major rebound from last year's 71 MMT crop.

 

Live cattle futures got off to a firmer start, but futures have since softened to slightly lower trade. Feeder cattle futures are mixed.

  • Traders are hopeful for a seasonal rebound in cattle futures thanks to tightening supplies, improving beef demand and a bullish technical chart pattern. But early gains are encouraging light profit-taking.
  • Showlist estimates are sharply lower this week and supplies are expected to tighten going forward.
  • Plus, the boxed beef market has firmed this week, though yesterday's slight gains slowed movement. Labor Day and back-to-school buys are supporting the product market.
  • The combination of improving demand and tightening supplies are expected to result in at least $1 higher cash cattle trade compared to last week's action at $121.
  • Futures gapped higher on the open, but traders have since closed those gaps.
  • Feeder cattle futures are mixed as traders weigh firmer corn prices against tightening supplies.

 

October and December lean hogs gapped sharply higher on the open and are enjoying strong gains. Other months are slightly higher.

  • With August lean hogs coming off the board at noon CT today, traders are actively working to narrow the $14-plus discount the October contract holds to the cash hog index.
  • While hog supplies are expected to build in the months ahead, packers are currently upping kill runs to take advantage of profitable margins.
  • Average hog weights held steady in Iowa and southern Minnesota the week ended Aug. 10 compared to the week prior.
  • The pork cutout value firmed 38 cents yesterday on improved movement of 82.7 loads.
     
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