Market Snapshot, 10:00 a.m. CT (VIP) -- July 18, 2013

July 18, 2013 05:12 AM
 

Corn futures are posting losses of 3 to 6 cents this morning.

  • December corn futures are facing some technical selling pressure today as the contract gapped below $5.00 overnight. So far, efforts to push the contract sharply lower have been met with bargain buying.
  • While oppressive heat remains in effect across the Corn Belt, traders are looking forward to forecasts for milder conditions tomorrow and precip from Friday into next week.
  • This is keeping attention away from this morning's impressive weekly export sales report. Sales of 152,900 MT for 2012-13 and 1,590,800 MT for 2013-14 topped expectations by a wide margin. Today's tally and last week's 1-MMT-plus figure show that active bargain buying is occurring among exporters, especially China.
  • Thus far, the market has displayed little concern about what this implies for tight old-crop supplies that leave little room for error for the slow developing 2013-14 corn crop. Gulf basis is on the rise at interior locations.
  • The market is also showing little concern about drought creeping back into the southern and western Corn Belt.

 

Soybean futures are posting losses in the teens to 20s today.

  • Forecasts for milder temps and precip in the Corn Belt Friday forward are weighing on the bean market.
  • Early pressure has triggered sell stops. The November contract's ability to respect key support at $12.50 will be telling.
  • The market is ignoring strong weekly export sales of 110,600 MT for 2012-13 and 591,700 MT for 2013-14. The overall tally narrowly topped expectations and more than doubled the prior week's tally.
  • Gulf basis strength this morning could be indicative of more export demand news ahead. Basis firmed 5 cents for July delivery, 10 cents for early August delivery and 9 cents for early September delivery.

 

Wheat futures are off to a choppy start, with Chicago and Minneapolis favoring the downside and Kansas City narrowly mixed.

  • Spillover from corn and soybeans are making it tough for wheat to find buyers. But ideas the downside has been overdone considering strong demand signals are limiting selling interest as well.
  • Weekly export sales of 996,600 MT represent strong demand, though the tally fell just short of lofty expectations.
  • Light pressure stems from news Strategie Grains raised its 2013-14 EU wheat forecast by 1.9 MMT from last month to 133.4 MMT. EU wheat production is now seen up 6% from 2012-13.
  • A Japanese delegation told USDA officials yesterday it needs reassurance via more testing that U.S. western white wheat is free of GMO material. Still, trade sources expect exports to resume by August.

 

Live cattle futures got off to a mixed start, but the market has since firmed to moderately higher trade. Feeder cattle futures are slightly to moderately higher.

  • Some additional light cash cattle trade took place in Iowa yesterday at steady prices, but elsewhere the cash cattle standoff continues. Much uncertainty exists as to this week's prospects.
  • Showlist estimates are tighter this week and supplies are expected to tighten going forward. Plus, traders appear comfortable leaving August futures at more than a $3 premium to the cash cattle index, signaling friendly expectations.
  • But boxed beef market performance has failed to impress. Yesterday, Choice and Select values fell $1.03 and 57 cents, respectively, but this did encourage strong movement of 244 loads. Choice boxed beef values have fallen for nine consecutive days.
  • Weekly beef export sales rose from the week prior to 15,200 MT, representing solid demand. Weekly beef exports of 15,800 MT were up 21% from the week prior.
  • Traders are also readying for Friday's Cattle on Feed Report, which is expected to reflect tightening supplies.
  • Ideas the downside was overdone yesterday and weakness in the corn market is promoting short-covering in feeder cattle futures.

 

Lean hog futures are off to another mixed start, with the front-month slightly higher and deferreds slightly lower.

  • Lean hog futures are seeing some light bull spreading today as supplies will likely build in the months ahead.
  • But the front-month contract remains at nearly a $6 discount to the cash hog index due to the current tight supply situation.
  • The market continues to watch for a low in the pork market. Yesterday, the pork cutout value slid just a penny, and movement surged to 417.9 loads. This could signal prices are nearing or at value levels.
  • Recent declines in the product market have pulled packer profit margins into the red. Thus packers are paying steady to lower prices for cash hogs today.
  • Traders are also beginning to look ahead to Monday's Cold Storage Report, which is expected to show frozen pork stocks as of June 30 at 626 million lbs., which would be down 5.4% from the month prior but up 5.5% from year-ago and 19.9% above the five-year average. This would be a record-high for the end of June.
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