Market Snapshot, 10:00 am CT (VIP) -- July 25, 2013

July 25, 2013 05:12 AM
 

September corn futures are down 8 cents, while deferred contracts are fractionally to 2 cents lower.

  • Heavy spillover from the soybean market and the fact that China has not returned as a buyer of U.S. corn since the price break below $5.00 is squashing buying interest today.
  • South Korean feed makers have upped their corn buys this week, but this business has largely gone to other countries with cheaper supplies.
  • Weekly corn export sales add to the negative tone. USDA reported net sales reductions of 27,900 MT for 2012-13 and sales of 515,900 MT for 2013-14. The combined tally fell short of expectations and week-ago.
  • Cool, wet weather is expected to continue for the Corn Belt through the weekend and into next week. The favorable growing conditions this implies are weighing on corn.
  • Gulf corn basis firmed a penny for October and December delivery and held steady for other months this morning.
  • Corn is also seeing some technical selling as September futures are testing $5.00 and December corn appears headed for a test of the November 2010 low of $4.60.

 

Soybean futures are again under heavy selling pressure. Futures are 20- to 30-plus cents lower with new-crop futures now leading losses.

  • Traders continue to actively liquidate August positions in soybeans and soybean meal. Early pressure triggered sell stops, but August beans are now well off session lows.
  • Cash markets have also softened amid a wave of farmer selling this week. Gulf basis is down 15 cents for July delivery and 10 cents for first half August delivery this morning. Basis for farther deferred delivery was steady to 4 cents lower.
  • The forecast for favorable Corn Belt weather through the weekend and over the 6- to 10-day outlook is weighing more heavily on new-crop beans today as this has eased concerns about the slow start to the growing season.
  • The market is ignoring stronger-than-expected weekly soybean export sales of 128,300 MT for 2012-13 and 665,200 MT for 2013-14, with China as the lead buyer.

 

Wheat futures have softened to post losses of 1 to 4 cents for SRW and HRW contracts, while HRS futures are mostly 2 to 5 cents lower.

  • Heavy spillover pressure from corn and soybeans is weighing on the wheat market today. Considering heavy losses in the bean pit, the wheat market is so far holding up quite well.
  • Helping the market to withstand pressure are better-than-expected weekly export wheat sales of 661,400 MT. China was the lead buyer.
  • Day 2 results from the Wheat Quality Council HRS tour showed an average yield on hard red spring wheat samples in northwest and north-central North Dakota of 45.1 bu. per acre compared with 45.5 bu. per acre last year and a five-year average of 42.6 bu. per acre from similar areas.
  • The Drought Monitor update today reflected some improvement in the Southern Plains, but some areas of the Central and Northern Plains were drier than normal the past week.
  • But the five-day forecast calls for some beneficial rains for these regions.

 

Live cattle futures are off to a steady to weaker start, with the front-month contract holding around unchanged and deferred contracts under light pressure. Feeder cattle have softened to post moderate to sharp losses.

  • Bids emerged at $119 in the Southern Plains yesterday, which was steady with the week prior. Around 10,000 head changed hands at that price in Kansas yesterday, but most packers stood their ground in hopes of getting firmer bids.
  • The steady-with-week-ago start to cash cattle trade is spurring some light profit-taking in cattle futures today.
  • Weekly beef export sales of 14,900 MT were down slightly from week-ago, but the tally was still relatively strong.
  • A risk-off stance is encouraging traders to book some light profits in feeder cattle futures. The market has been in an uptrend since mid-June.

 

Lean hog futures got off to a mixed start, but the market has since softened to slightly lower trade.

  • Nearby contracts gapped higher on the open as they initially benefited from the discount they hold to the cash hog index. The front-month contract is now within $1 of the index, but the October contract is nearly $14.00 below the cash index.
  • The cash market is mostly steady today. While last week's heat and humidity slowed hog weight gain and is limiting supplies this week, still-negative packer cutting margins are limiting their willingness to pay up for supplies.
  • Adding pressure, the pork cutout value fell $1.01 yesterday, though movement was decent at 388 loads.
  • Weekly pork export sales improved from week-ago, but sales were still fairly light at 6,800 MT.
     
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