Market Snapshot, 10:00 am CT (VIP) -- July 15, 2013

July 15, 2013 05:07 AM
 

Corn futures are posting losses of mostly 2 to 5 cents this morning.

  • The forecast lacks threatening heat, which the market is giving a "non-threatening" read.
  • Plus, the 6- to 10-day forecast from the National Weather Service calls for below-normal temps and above-normal precip from Iowa into the eastern Corn Belt.
  • But the driest first half of July in nearly 40 years following the wettest May and June on record for Iowa means the crop itself tells a different story.
  • USDA announced another 120,000-MT corn sale to unknown destinations this morning, signaling softer prices have improved export demand.
  • Strength in the U.S. dollar index is giving bears a slight edge as well.

 

Soybean futures have erased early losses and rallied 24 cents higher in the front-month contract and roughly 6 to 9 cents higher in deferred contracts.

  • Early pressure was seen as a bargain buying opportunity to start the week amid signs of improved demand.
  • The slow development of the bean crop is also beginning to get some attention. USDA will provide an update on this at 3:00 p.m. CT today.
  • Somewhat offsetting this, however, is a cooler, wetter 6- to 10-day forecast than indicated Friday.
  • Bulls were also encouraged by the November contract's ability to bounce off support in the $12.50 area.
  • Somewhat tempering buying enthusiasm is news China's second quarter GDP came in at 7.5% growth, which was in line with expectations but down 0.2 percentage points from the previous quarter. This raises demand concerns going forward.

 

Wheat futures are down 9 to 10 cents in Chicago and 8 to 10 cents in Kansas City; Minneapolis wheat is 7 to 8 cents lower.

  • Traders are booking some profits to start the week, encouraged by strength in the U.S. dollar index and spillover from the corn market.
  • Also, the market needs a steady stream of demand news to maintain gains. This is lacking today and the market is concerned China's recent buying binge is over.
  • But China National Grain & Oils Information Center projects the country's imports will total 5 MMT, up 73% from year-ago.
  • And 2013-14 world wheat ending stocks are now expected to decline from year-ago, despite projections for bumper crops in Europe and the Black Sea region.

 

Live cattle futures are posting slight gains in early trade. Feeder cattle futures are sharply higher.

  • Live cattle futures are off to a better-than-expected start thanks to ideas supplies will tighten going forward, helping the cash market to improve.
  • Late last week, cash cattle trade took place at steady prices of $119, whereas steady to lower trade was anticipated. The market appears to have friendly cash cattle expectations as traders are extending the $3-plus premium the front-month contract holds to these prices.
  • While Choice and Select boxed beef cuts fell on Friday and last week, movement has improved as softer prices have spurred improved retailer buying.
  • Softer corn prices and a firm tone in live cattle are lifting feeder cattle futures.

 

Lean hog futures are posting slight to moderate gains to start the week.

  • Ideas the downside was overdone last week are lifting lean hog futures today.
  • The pork cutout value rose 53 cents Friday, though movement slowed to 288.2 loads.
  • Also, nearby futures remain at a discount (slight for the front month, but wide for the August contract) to the cash hog index. July hogs expire at noon CT today.
  • Cash hog bids are steady to weaker today as most plants are well supplied for near-term needs. Recent pork product market declines have pulled packer cutting margins back into the red.
  • Warmer temps are tightening market-ready hog supplies.
  • But a heat wave also raises pork demand concerns.
     
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