Market Snapshot, 10:00 a.m. CT (VIP) -- July 19, 2013

July 19, 2013 05:05 AM
 

Corn futures are posting losses around 3 cents in the front month contract, while new-crop futures are mostly 5 to 7 cents lower.

  • The approach of a cold front that is expected to bring relief from hot, dry Midwest conditions is weighing on the corn market as traders prepare for the weekend.
  • But pressure on September futures is being limited by recent signs of improved demand and tight carryover supplies.
  • The market is not overly concerned about the 6- to 10-day forecast, as the central and eastern Corn Belt are expected to see mostly normal temps, though some above-normal temps are expected for far western Belt states. The precip outlook is also favorable as it calls for normal precip in the western Midwest and above-normal precip in the eastern part of the region.
  • Gulf soybean basis firmed 3 cents for September delivery, while it held steady for other delivery months this morning.

 

Soybean futures are up around a dime in the August contract, while deferred months are narrowly mixed.

  • Soybean futures are seeing some bull spreading activity this morning as recent signs of demand improvement add to old-crop supply concerns.
  • Gulf basis firmed 5 cents this morning after posting strong gains yesterday. This signals more export demand news may be ahead.
  • Much uncertainty about the slow-developing bean crop adds to such concerns, as the market has been banking on a rebound in production to alleviate tight supplies.
  • Monday's crop condition report will likely reflect more deterioration of the bean crop after a heat wave baked the crop this week.
  • However, more favorable conditions are expected to move into the Corn Belt today and continue into next week.

 

Chicago and Kansas City wheat futures are posting losses mostly around 1 to 2 cents, while Minneapolis is mixed.

  • Spillover pressure from the corn market is giving bears an edge as traders ready positions for the weekend. The technical posture of the market is also bearish.
  • But pressure is being limited by USDA's announcement of a 120,000 MT SRW wheat sale to China for 2013-14 delivery.
  • Also, there has been some talk that Brazil is in the market for U.S. HRW wheat due to the shortfall of Argentina's crop.
  • The market also received confirmation China bought 600,000 MT of Aussie wheat. This news is already largely factored into prices as it was rumored earlier in the week.

 

Live cattle futures are off to a slightly lower start. Feeder cattle are slightly to moderately higher.

  • Live cattle traders are reducing their risk exposure ahead of the Cattle on Feed Report, the start of cash cattle trade and the weekend.
  • The Cattle on Feed Report is expected to be friendly as all categories are expected to come in below year-ago. Placements are the wildcard as there is more than a 10-point spread in the average guess range.
  • Iowa has seen light cash cattle trade at steady prices nearly every day this week, while other locations have yet to see any cash action. Last week, trade took place at $119 in the Southern Plains.
  • Cash cattle prospects remain uncertain. While showlist estimates are tight and supplies are expected to tighten going forward, boxed beef price action has been steady to lower, eroding packer profit margins.
  • The recent slide in Choice boxed beef prices has spurred improved movement over the past week, though retailer buying yesterday was light.
  • Weakness in the corn market and tightening supply prospects are lifting feeder cattle.

 

Lean hog futures are posting slight losses this morning.

  • Ongoing weakness in the product and cash markets is weighing on lean hog futures.
  • The cash hog index has been trending steadily lower, erasing urgency to push the front-month contract higher. Looking forward, traders expect supplies to build seasonally.
  • The slide in the pork market continued yesterday and movement slowed. This took another bite out of packer margins. Thus, they are again offering steady to lower prices for cash hogs.
  • Traders are also looking ahead to Monday's Cold Storage Report, which is expected to show frozen pork stocks at record-large levels for the end of June.
     
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