Market Snapshot, 10:00 am CT (VIP) -- August 9, 2013

August 9, 2013 05:09 AM
 

Corn futures are posting fractional to 2-cent losses in early trade.

  • Buying and selling interest is limited this morning amid a lack of fresh news, though non-threatening weather and bearish attitudes giving bears the upper hand..
  • In the first survey-based estimate of the season on Monday, USDA is expected to peg the 2013 corn crop at 14.005 billion bu., up 55,000 bu. from last month's projection.
  • Traders expect USDA to peg the national average yield at 157.7 bu. per acre, which compares to the 156.5-bu.-per-acre projection in July.
  • The forecast calls for cool, mostly dry conditions early next week for the Midwest, and the 6- to 10-day outlook calls for below-normal temps for most of the Corn Belt and above-normal precip in the western Belt. The market views this as non-threatening.
  • But increasing dryness in Iowa is causing traders to exercise a bit of caution.
  • Gulf basis is up a penny for October delivery and steady for other months this morning.

 

Soybean futures fractionally to 5 cents higher this morning.

  • Recent signs of improved demand for soybeans on the price break is lifting futures this morning. Traders are on watch for signs the market has put in a low.
  • But major chart damage the past month will make it tough for bulls to gain a foothold.
  • Plus, the 6- to 10-day outlook calls for above-normal precip for some areas of the western Corn Belt that are in need of rain. Temps are expected to remain below normal. Traders view this as non-threatening for the crop.
  • The market is also working to ready positions for USDA's Crop Production Report Monday. Pre-report expectations are for USDA to peg the crop at 3.336 billion bu. on a national average yield of 43.6 bu. per acre. Last month, USDA projected the bean crop at 3.42 billion bu. and the yield at a record 44.5 bu. per acre.
  • Positive economic data out of China overnight is also supportive. China's consumer price index (CPI) stabilized at 2.7% above year-ago in July and factory output rose 9.2% from year-ago. A stable economy points to ongoing strong soy demand from the country.
  • Gulf basis surged 10 cents for immediate delivery and 5 cents for early September delivery this morning, signaling more demand news may be ahead. Basis for deferred delivery ranged from 5 cents lower to a penny higher.

 

Wheat futures are down 1 o 3 cents in HRW and SRW contracts, while HRS wheat is fractionally higher.

  • The winter wheat markets are mirroring slight losses in the corn market this morning.
  • Traders are also readying for USDA's Monday report, which is expected to reflect an all wheat crop around 2.106 billion bu., which would be down slightly from last month.
  • News Romania's ag ministry says the country harvested its largest wheat crop since 2005 and its second largest crop in more than 40 years is adding to concerns that U.S. wheat will miss out on export demand due to cheaper prices elsewhere.

 

Live cattle futures got off to a slightly higher start, but futures have since softened to trade mixed.

  • Live cattle futures initially saw some light followthrough buying after yesterday's news that Tyson Food has notified its suppliers it will no longer accept cattle fed with Zilmax beginning Sept. 6. This heightened concerns about tight beef supplies.
  • But countering this is news Cargill does not plan to follow suit. This has encouraged some light profit-taking.
  • Meanwhile, the cash cattle standoff continues. Nearby futures stand at a $2.50 or more premium to last week's cash cattle trade, which was mostly around $120, signaling friendly cash cattle expectations.
  • While the boxed beef performance this week has generally been lackluster, supplies are expected to tighten going forward.

 

Lean hog futures are facing selling pressure this morning.

  • A $1.03 slide in the pork cutout value yesterday is weighing on hogs this morning as it raises concerns the market may have put in a near-term high.
  • The cash hog market is expected to be mostly steady today amid light demand ahead of the weekend.
  • But recent cash market strength and the $1-plus premium the cash index holds to the August contract and the nearly $17 premium cash holds to the October contract are limiting selling interest.
  • While Labor Day buying could continue to support the cash and product market for a bit longer, supplies are expected to build seasonally soon.
     
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