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

July 10, 2013 05:11 AM
 

Corn futures are mixed amid bull spreading, with July up 5 cents and deferred contracts mixed with a downside bias.

  • The market expects to be reminded of tight carryover supplies in Thursday's Supply & Demand Report. This is supporting July and September corn futures.
  • Deferred contracts, on the other hand, are seeing some light profit-taking after recent gains. But otherwise, selling interest is limited as the market has found value buying in the $5 area and the forecast raises some production concerns.
  • USDA announced this morning China purchased 120,000 MT of new-crop U.S. corn, adding to ideas prices have found value.
  • Heat in the 6- to 10-day forecast raises concerns about a shallow-rooted corn crop. Recent weather has also seemed to shift to a drier pattern, so the market is not putting a lot of stock in the extended outlook for above-normal precip for the upper Midwest.
  • Gulf basis fell a penny for first-half July delivery, while August delivery firmed a penny.

 

Soybean futures are 5 to 7 cents higher in old-crop contracts while new-crop is 8 to 12 cents higher.

  • A less favorable forecast is encouraging buying interest again today in a continuation of the recent trend.
  • The 6- to 10-day forecast calls for heat over much of the Corn Belt, which is concerning for a slow-developing crop.
  • Signs of ongoing strong Chinese demand are also supportive. The country imported a record 6.93 MMT of soybeans in June, which is up 36% from the previous month and 23% higher than a year-ago, as South American supplies became more readily available.
  • Somewhat offsetting this, however, is disappointing Chinese trade data last month. Exports declined by 3.1% from year-ago.
  • Gulf soybean basis slipped 4 cents for immediate delivery, while basis for second-half July delivery firmed 3 cents and rose 3 to 5 cents for September delivery. This points to tight supplies and/or improved export demand.
  • The market is also readying for USDA's Supply & Demand Report tomorrow, in which USDA is expected to trim old-crop carryover 4 million bu. to 121 million bushels. The market expects the ag department to raise new-crop carryover by 5 million bu. from June to 270 million bushels.

 

Wheat futures are posting losses around 2 to 6 cents at all three locations.

  • Wheat futures are seeing light profit-taking after gains the first two days this week.
  • But downside risk remains limited by recent strong SRW wheat buys in excess of 1.3 MMT by China. There is some concern about slowed demand after recent price improvement.
  • Meanwhile, harvest pressure has eased as HRW wheat harvest is in its final days across Kansas. Yields were not as bad as some had feared.
  • The market is also beginning to ready positions for tomorrow's USDA reports. Traders look for USDA to tighten 2013-14 carryover from last month to 624 million bushels. Traders also look for USDA to trim its all wheat crop peg from 2.08 billion bu. last month to 2.057 billion.

 

Live cattle futures are off to a steady to weaker start. Feeder cattle futures opened under pressure, but they have improved to mixed trade.

  • Followthrough technical buying is lacking after yesterday's bullish reversal.
  • Light profit-taking is being seen as the boxed beef market is still searching for a low.
  • Yesterday, Choice values fell another 53 cents, though Select firmed 72 cents. Movement improved to 169 loads, though this still failed to impress.
  • Choppy boxed beef action could make it tough for feedlots to get higher prices for cash cattle despite tighter showlist estimates. But August futures remain at nearly a $4 premium to the bulk of last week's cash action.
  • Strength in the corn market this week is pressuring the feeder cattle market again today.

 

Lean hog futures are moderately higher this morning.

  • Lean hog futures are benefiting from short-covering amid ideas the downside has been overdone. Weakness in the U.S. dollar index is also encouraging to that end.
  • Also encouraging short-covering was an uptick in pork movement yesterday on the $1.08 decline in the pork cutout value. This somewhat eases concern about a pullback in pork demand as we enter the heat of summer.
  • But the softer prices cut into packer profit margins and are encouraging some to lower cash hog bids. Others are keeping bids steady as they are in need of more loads.
  • Support also stems from the fact that July futures remain at more than a $1.50 discount to the cash index, while the August contract is nearly $7 below the index.
     
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