Market Snapshot, 10:00 am CT (VIP) -- July 24, 2013

July 24, 2013 05:12 AM
 

Corn futures have seen choppy, two-sided trade this morning. At present, the September contract is 6 cents lower, while deferreds are fractionally to a penny lower.

  • Buying interest in the market is being limited by favorable weather as the corn crop enters or nears its key pollination stage.
  • Temps are mild across the Midwest and the upper Midwest is expected to see an inch or two of rain in the next five days. Some other areas have received precip the first half of the week, though some areas missed out.
  • Spillover from soybeans is weighing on the front-month contract.
  • The market is hesitant to push new-crop futures much lower as dips below $5.00 for December corn futures have previously spurred strong Chinese buys. Gulf basis was steady to a penny higher this morning.
  • Weekly ethanol production fell 23,000 barrels per day (bpd) to to 853,000 bpd over the past week. Ethanol stocks rose 700,000 barrels from the week prior to 17.3 million barrels.

 

Soybean futures are lower with the August contract down its 70-cent limit. September is down 25 cents and new-crop contracts are 6 to 8 cents lower.

  • Heavy bull spread unwinding is weighing on old-crop contracts today. Basis levels at interior locations have plunged.
  • Gulf soybean basis has also plunged 65 cents for immediate delivery and 10 to 20 cents for August delivery this morning. This signals increased farmer selling and easing concerns about new-crop supplies.
  • Pressure on the front-month contract has triggered sell stops as it plunged through uptrending support and monthly lows.
  • Meanwhile, buying interest in new-crop futures is being limited by favorable near-term growing weather in the Corn Belt.
  • Also, rumors continue to circulate that China may release 3 MMT of government soybean reserves onto the domestic market.

 

Chicago and Minneapolis wheat futures are mostly firmer, while Kansas City wheat is narrowly mixed.

  • The extent of buying interest for the time being is short-covering as exporters have recently favored cheaper Black Sea region supplies over those of the U.S.
  • Algeria bought at least 400,000 MT of optional origin wheat overnight, but that business is likely to be filled with French wheat. Traders are awaiting results of the Egyptian tender. Iraq has tendered to buy optional origin wheat.
  • But recent export sales and export inspections tallies have recently been strong.
  • Scouts found better-than-average yield potential in spring wheat fields in southern North Dakota and northern South Dakota on the first leg of the Wheat Quality Council HRS tour on Tuesday.

 

Live cattle futures are enjoying slight gains this morning. Feeder cattle futures are favoring the downside in light, choppy trade.

  • Live cattle and mildly firmer as traders await cash cattle trade.
  • Initial bids emerged in Texas and Kansas at $119 this morning, steady with week-ago. Some light sales have taken place at that price in Kansas. This is telling of tight supplies as boxed beef action this week has been disappointing.
  • Yesterday, Choice boxed beef cuts plunged $2.64 and Select fell $1.70. But the softer prices did spur strong movement of 202 loads. Choice cuts have slid for 13 consecutive sessions.
  • Recent product market declines have eroded packer profit margins.
  • Recent gains are encouraging light profit-taking in feeder cattle futures.

 

Lean hog futures are slightly lower this morning.

  • Traders are taking advantage of yesterday's strong gains by booking some profits.
  • And while Monday's Cold Storage Report, which reflected better-than-expected demand, will limit the market's downside, expectations of a seasonal rise in supplies and thus a softening in the product and cash markets will also keep buying enthusiasm in check.
  • But cash hog bids are mostly steady today as seasonal expansion is not yet underway and some are still in need of supplies for late-week kills. Average hog weights in Iowa and southern Minnesota declined by 0.9 lb. the week ended July 20.
  • Also limiting selling interest was much-improved action in the pork product market yesterday. The pork cutout value firmed 62 cents and packers moved 403.6 loads of product on the day.
  • Light support also stems from the August contract's $2.00 discount to the cash index.
     
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