Market Snapshot, 10:00 am CT (VIP) -- August 1, 2013

August 1, 2013 05:17 AM
 

Corn futures are down 8 to 12 cents this morning.

  • The turn of the calendar has traders reestablishing their short positions in corn futures due to favorable weather forecasts for the remainder of the critical pollination period.
  • The 6- to 10-day and 8- to 14-day weather outlooks project below-normal temps across the Corn Belt with rising chances for precipitation. Traders continue to shrug off concerns of the late-developing crop and holes in the western Corn Belt.
  • Traders are also ignoring this morning's National Drought Monitor, which shows expansion of drought in Iowa to include all but the eastern portion of the state.
  • The market is also shrugging off signs the selloff is triggering increased export interest. This morning's weekly sales data showed new-crop purchases of 1,091,200 MT, which was well above expectations. In addition, USDA announced weekly old-crop sales of 134,000 MT.
  • Traders are also ignoring a 20-cent improvement in the Gulf corn basis for immediate delivery. Basis levels are unchanged for last-half August through October delivery, 2 cents weaker for November delivery and unchanged for December delivery.

 

August soybean futures are slightly lower, while deferred futures are posting double-digit losses in most contracts.

  • Traders are starting the new month of trading by resuming the pattern of bull-spreading August futures versus deferred contracts. Tight supplies continue to support the August contract while benign weather forecasts are pressing new-crop futures lower.
  • Near-term weather forecasts are viewed as favorable for the late-developing crop with cooler temperatures seen through the first half of August and increasing chances for rain even though this morning's National Drought Monitor shows expansion of drought in Iowa to include all but the eastern portion of the state.
  • Traders are shrugging off the pick-up in export demand due to the drop in new-crop prices. USDA reported weekly export sales of 1,030,900 MT for 2013-14, which was well above expectations. Weekly sales of 78,500 MT were reported for 2012-13.
  • Gulf soybean basis is 25 cents stronger for first-half August delivery, unchanged for last-half August through first-half September, 2 cents weaker for last-half September, unchanged for October and 1 cent lower for November.

 

SRW wheat futures are mostly 11 to 13 cents lower this morning, with HRW 8 to 10 cents lower and HRS futures are 2 to 4 cents lower.

  • Spillover selling from corn and soybean futures has wheat traders starting the month on the defensive. A sharply higher dollar is adding to the negative trend.
  • This morning's weekly wheat export sales report showed sales of 596,900 MT, which was within expectations. China topped the buyer's list as some previous sales were switched from unknown destinations. In addition, export sources say Brazil has purchased around 400,000 MT of U.S. HRW wheat and is shopping for more to fill in needs due to crop concerns and a shortage of Argentine exports.
  • However, Ukraine's ag ministry forecasts a record-large grain crop this year and wheat exports are expected at 9 MMT. This wheat usually moves into export channels at prices below U.S. prices.
  • Traders continue to view weather forecasts as favorable for the spring wheat crop, which is adding to selling interest in HRS futures.
  • Gulf SRW basis in unchanged this morning with the exception of first-half September delivery, which is 2 cents lower.

 

Live cattle futures are mostly lower while feeder cattle futures are higher.

  • Price action in live cattle futures continues to be light and choppy and bound within a tight trading range as traders wait on direction from the cash cattle market.
  • Traders continue to look for seasonal strength in cash cattle and wholesale beef markets and are willing to keep August futures at a small premium to last week's cash trade in the Southern Plains.
  • Traders are looking for direction from the boxed beef trade, too, but Choice beef was 46 cents weaker yesterday and Select was a penny lower. However, movement was moderate at 213 loads, which is an increase from recent days.
  • Feeder cattle futures are higher on the selloff in grain futures.

 

Lean hog futures are mildly higher this morning.

  • The rise in the pork cutout value yesterday and strong movement of 401.5 loads is supporting the slim gains in August futures.
  • Traders continue to look for the seasonal rise in hog supplies, hog weights and weakness in wholesale prices. This attitude is limiting buying interest.
  • But they are not getting seasonal weakness as yet as cash prices are slightly higher and the August contract remains at a discount to the cash index.
  • Also limiting buying interest in deferred futures is the negative chart picture that features an untested downside gap.
     
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