Market Snapshot, 10:00 a.m. CT (VIP) -- July 11, 2013

July 11, 2013 05:03 AM
 

Corn futures are mixed with the front-month up 8 cents and new-crop mostly 3 to 4 cents lower.

  • Focus for the time being is on readying positions for USDA's Supply & Demand Report.
  • Traders expect USDA to lop another 47 million bu. off its old-crop carryover estimate to around 722 million bu., which is supporting July corn.
  • The market also expects USDA to cut 75 million bu. from its new-crop estimate to bring it to 1.874 billion bushels. This still represents a major rebound in supplies, which is pressuring new-crop futures.
  • Selling is also being limited by signs of demand improvement. Weekly corn export sales of 392,000 MT for 2012-13 and 657,800 MT for 2013-14 came in well above expectations and the overall tally topped the 1 MMT mark.
  • Plus, USDA announced a daily new-crop corn sale to China today for 120,000 MT.
  • And a recent Reuters report says that China's state grain buyer has recently purchased more than 1 MMT of U.S. new-crop corn.
  • The forecast for above-normal temps across the heart of the Corn Belt during pollination is on the back burner for the time being.

 

Soybean futures have improved to post gains of 4 to 6 cents with old-crop futures leading gains.

  • Futures are favoring the upside ahead of USDA's 11:00 a.m. CT reports, in which the department is expected to trim old-crop carryover by 4 million bu. from last month to 121 million bushels. Traders expect USDA to raise new-crop carryover by 5 million bu. from June to 270 million bushels.
  • Signs of value buying are providing underlying support. USDA announced an optional origin sale of 120,000 MT of soybeans to unknown destinations for 2013-14 delivery.
  • And while this morning's Weekly Export Sales Report included a net sales reduction of 70,900 MT for 2012-13, sales of 410,800 MT were reported for 2013-14, which helped the overall tally match expectations.
  • Exports of 77,400 MT for the week ended July 4 were a marketing year low.
  • Selling interest is also being limited by the forecast for heat over the next 6 to 10 days.

 

Wheat futures are enjoying gains of mostly 2 to 5 cents in all three markets today.

  • Much stronger-than-anticipated weekly export sales of nearly 1.5 MMT for 2013-14 are lifting wheat futures today. China was the lead buyer.
  • This follows recent daily sales announcements to the country that have topped 1.3 MMT.
  • China's state grain buyer says its wheat imports will rise by 73% in 2013-14 to 5 MMT due to late-season weather trimming its crop.
  • Strong demand and slower HRW harvest in the Midwest due to rains are boosting basis levels at interior locations. Gulf basis also surged 3 to 13 cents for July through September delivery this morning.
  • But buying enthusiasm is being curbed by anticipation of USDA's Crop Production and Supply & Demand Reports.
  • Traders look for USDA to tighten 2013-14 carryover by 35 million bu. from last month to 624 million bushels. They also expect USDA to trim its all wheat crop estimate from 2.08 billion bu. last month to 2.057 billion bushels.

 

Live cattle futures have seen choppy trade; most contracts are currently posting slight losses. Feeder cattle futures, in contrast, are enjoying slight gains.

  • Action in the cattle markets is being limited by anticipation of USDA's grain reports today. Any reaction to these reports could spill over to the livestock market.
  • A surge in movement to 254 loads yesterday on mixed price action signals some value buying may be occurring among retailers.
  • Meanwhile, the cash cattle trade standoff continues. So far, just light sales have taken place in Iowa at $122, steady with the upper end of last week's trading range for the western Corn Belt. Futures maintain a slight premium to last week's cash action.
  • Weekly beef export sales rose 2,200 MT from the week prior to 14,600 MT.
  • Open interest has been steadily climbing since the start of the year, especially so over the past month. This signals increasing interest in the market among speculators.

 

Lean hog futures are split, with the front month slightly higher and deferreds posting slight losses.

  • Buying and selling interest is limited ahead of USDA's reports today which will give the livestock sector a better idea of the feed situation.
  • Deferred contracts are also seeing some profit-taking after a disappointing performance in the product market yesterday.
  • The pork cutout value plunged $2.51 yesterday, though this spurred strong movement of 427.9 loads. This pulled packer cutting margins back into the red.
  • Thus, packers are again paying steady to lower prices for market-ready supplies. While supplies continue to tighten, most packers are well supplied for near-term needs.
  • Pressure on the front-month is being limited by the discount it holds to the cash index.
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