Market Snapshot, 10:00 am CT (VIP) -- July 26, 2013

July 26, 2013 05:06 AM
 

 

Corn futures are fractionally to 1 cent lower this morning.

  • Favorable weather continues to weigh on new-crop corn futures. Rains rolled through the western Corn Belt overnight and are extending into the eastern Belt this morning. Temps are unseasonably cool and expected to remain that way into next week.
  • The 10-day weather forecast calls for normal to below-normal temps and normal to above-normal precip. As a result, traders feel the bulk of the corn crop will pollinate under non-stressful conditions.
  • Ideas the downside has been overdone are limiting selling pressure thus far.
  • USDA reported daily sales of 211,328 MT to unknown destinations, with 8,128 MT for 2012-13 and 203,200 MT for 2013-14. Traders are still waiting on Chinese demand to surface as the last drop below $5.00 in December corn futures triggered strong Chinese purchases.

 

August soybeans are under light pressure. New-crop contracts are mildly firmer.

  • The heavy liquidation pressure seen in August soybeans has eased this morning, but August soybean meal futures are sharply lower again as traders continue to get out of long positions amid plunging basis.
  • New-crop futures are attempting to work higher amid ideas the downside has been overdone. But buying interest is limited to mild short-covering as traders are showing no interest in actively buying futures.
  • USDA reported a daily sale of 220,000 MT of U.S. beans to China for 2013-14. That's a sign prices have fallen to "value" levels. But there continues to be talk of Chinese cancellations and that China will release state-owned reserves onto the domestic market.

 

SRW futures are mostly 3 to 4 cents higher, while HRW and HRS futures are steady to 2 cents higher this morning.

  • Wheat futures are attempting to work higher amid light corrective buying, but the upside is limited with corn remaining under pressure.
  • Until the corn market finds some buying interest, the upside is likely limited to corrective buying for wheat.
  • Global demand for wheat has improved, but much of the business is going to countries other than the U.S. as our prices are still above the competition. The Black Sea region is getting much of the recent business.
  • After sampling fields in North Dakota, far northern South Dakota and far western Minnesota the past three days, scouts on the Wheat Quality Council HRS tour calculated a hard red spring wheat yield of 44.9 bu. per acre, which was exactly the same as they found last year, but greater than the five-year tour average of 43.3 bu. per acre. Tour participants say while yield potential is the same as year-ago, this year's crop still has a ways to go before harvest because of the delayed start.

 

Live cattle and feeder cattle futures are slightly to higher this morning.

  • Traders continue to look for a seasonal low in both the cash and wholesale beef markets. That thinking has kept futures in a narrow trading range the past several weeks. Yesterday's rebound after probing the lower side of the range has traders leaning to the positive side this morning.
  • The wholesale beef market is supporting that view. Boxed beef prices rose for the second day in a row on Thursday, suggesting a seasonal low may be in the works.
  • The cash cattle market has shown increased sales activity at $119 in the Southern Plains. That steady-with-a-week-ago price could be the early signs of a seasonal low, some traders believe.
  • Feeder cattle futures are following the lead of live cattle futures. A mildly weaker tone in corn this morning is also supportive for feeders.

 

Lean hog futures started with a mixed tone, but have turned lower.

  • Lean hog futures are feeling pressure from ideas corrective gains earlier this week were overdone. As a result, buying interest has eased
  • Additionally, traders feel the cash market will soften further moving forward. Therefore, there isn't as much urgency to reduce the discount futures hold to the cash market.
  • Cash hog bids are steady at most Midwest locations this morning amid limited demand as packers continue to work with negative margins.
  • The pork cutout value was $1.04 higher Thursday, but with pork supplies expected to build seasonally, traders are fearful the product market will face more near-term pressure.
     
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