Market Snapshot, 10:00 a.m. CT (VIP) -- July 17, 2013

July 17, 2013 05:06 AM
 

Corn futures are posting slight losses of 4 to 6 cents this morning.

  • Traders are focusing on a shift to favorably wetter forecasts overnight. This weekend, cooler temps and showers are expected to move into the Corn Belt Friday. These rains are now expected to linger in western areas thorough the weekend.
  • Market action has been highly influenced by the weather after Monday's Crop Condition Report reflected deterioration of the corn crop and the hot, dry conditions for the region this week signal more declines are likely this week.
  • Also, the 6- to 10-day outlook of the European model calls for more rain.
  • Weekly ethanol production the week ending July 12 of 876,000 barrels per day (bpd) was down 5,000 bpd from last week.
  • A 5-cent slide in Gulf basis for immediate and early August delivery also signals an increase in farmer selling and/or slower demand.
  • Strength in the greenback is also encouraging of some light profit-taking. The dollar firmed after U.S. Federal Reserve Chair Ben Bernanke reiterated plans to scale back the Fed's bond-buying program, though he stressed the plans were subject to change.

 

Soybean futures are posting losses of 2 to 6 cents with new-crop leading losses.

  • New-crop soybean futures are also being pressured by a favorably wetter forecast for the Corn Belt this weekend and into next week.
  • But pressure is being somewhat offset by ideas the soybean crop is seeing further deterioration this week under hot, dry conditions.
  • Also, news of another daily soybean sale amounting to 165,000 MT of new-crop U.S. soybeans to China reminds that softer prices have lifted demand.
  • News China's foreign direct investment surged 20.12% over year-ago last month eases concerns about a slowdown in the nation's economy. Also supportive the commerce ministry's statement that it will soon introduce measures to support exports and imports.

 

Wheat futures are seeing choppy trade at all three locations, with most contracts favoring the upside.

  • Wheat futures are seeing some light short-covering today, with buying interest being limited by spillover from corn and soybeans.
  • The wheat market needs a fresh stream of demand news to rally and daily sales announcements have dried up of late.
  • However, industry sources signal China may import up to 10 MMT of wheat for 2013-14 as roughly 20 MMT of this year's crop is expected to be downgraded to feed wheat. Trade sources report China is reportedly pricing at least 500,000 MT of Australian milling wheat.

 

Live cattle futures are off to a mixed start with most contracts currently favoring the downside. Feeder cattle futures are facing light profit-taking pressure.

  • Buying and selling interest is limited in the live cattle market today amid uncertainty about this week's cash prospects. Futures remain at a $3-plus premium to the cash index.
  • A few additional sales took place in Iowa yesterday following light trade at steady prices there on Monday. But late-week trade is expected elsewhere.
  • Boxed beef market performance this week has been disappointing. Choice boxed beef cuts slid another 4 cents yesterday, the eighth consecutive day of declines. Select cuts firmed 41 cents, but movement was again light at 142 loads.
  • On the other hand, Friday's Cattle on Feed Report is expected to remind the market of tightening supplies, as all categories are expected to come in below year-ago levels. The Cattle Inventory Report is also expected to reflect tightening supplies.

 

Lean hog futures are split amid some bull spread unwinding, with 2013 contracts slightly lower and deferred contracts slightly higher.

  • Lean hog futures are seeing light position evening amid a mixed bag of fundamental and technical signals.
  • The pork cutout value fell another 98 cents yesterday, pulling packer profit margins back into the red. But the softer prices spurred much-improved movement of 435.9 loads.
  • Early cash hog bids are mostly steady, though some weaker bids are expected as most packers are well supplied on near-term needs and thus are working to improve margins. But heat in the Midwest could make feedlots unwilling to transport market-ready hogs.
  • But traders are hesitant to push nearby contracts much lower as nearby contracts are still at more than a $6 discount to the cash index.
  • Technically speaking, it appears lean hog futures have put in a short-term low after Friday's island bottom, but the market is still awaiting confirmation.
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