Market Snapshot, 10:00 am CT (VIP) -- July 29, 2013

July 29, 2013 05:12 AM
 

Corn futures have chopped on either side of unchanged this morning. At present, most contracts are steady to 2 cents lower.

  • The market is focused on the weather as corn moves through its key pollination period.
  • Both the five-day and 6- to 10-day outlooks are non-threatening as they call for cool temps and precip for most of the Corn Belt.
  • But recognition that cool temps could potentially push back the harvest date even further is limiting selling interest.
  • This has encouraged hedge funds to more than double their net short positions as of July 23 over the week prior to a record-large size.
  • Basis levels around the Midwest are varied as the steep price slide continues at some locations, while diminished farmer selling and tight supplies have again forced some end-users to raise bids.
  • Gulf basis is steady this morning, signaling some stabilization from last week.

 

Soybean futures are mixed with the front-month contract around 5 cents higher and new-crop contracts double-digit lower.

  • Traders are starting the week by engaging in some bull spreading encouraged by the non-threatening forecast and tight old-crop supplies.
  • Cool temps and scattered rain chances this week and calls for this trend to continue over the 6- to 10-day period are pressuring new-crop beans.
  • But while cool temps ease dryness concerns, they can also slow the crop's development, further increasing the need for an extended growing season. Traders will receive an update on the condition and development of the U.S. bean crop from USDA this afternoon.
  • Basis levels in some interior locations have stabilized or even firmed thanks to tight supplies, but ideas production will rebound continues to pressure basis in other locations.
  • News AgRural expects Brazil's 2013-14 bean crop to rise 9% from year-ago to 89.1 MMT is adding light pressure to new-crop beans.

 

SRW, HRW and HRS wheat futures are enjoying fractional to 2-cent gains this morning.

  • Ideas the downside has been overdone are lifting wheat futures today, though losses in corn and beans are limiting buying interest to short-covering.
  • The market is also benefiting from news Japan may lift its ban on U.S. western wheat this week. Trades sources say the country may require certification wheat is free of GMO material prior to shipment, but they believe this is a step in the right direction to resuming trade sooner rather than later.
  • The market is also benefiting from ideas the recent price decline is sparking end-user buying interest.
  • Gulf SRW wheat basis is up 7 cents for immediate delivery this morning.
  • Iraq and Jordan have tendered for 50,000 MT and 100,000 MT, respectively, of optional origin wheat.

 

Live and feeder cattle futures are enjoying gains this morning.

  • Firmer cash cattle trade in Nebraska and Iowa Friday at $121 and steady trade in the Southern Plains at $119 has sparked tentative optimism the cash market has put in a near-term low.
  • But strength in the boxed beef market is needed to encourage packers to raise cash cattle bids. On Friday, Choice cuts fell 51 cents, Select firmed a penny while movement was light at 135 loads.
  • Traders are also awaiting this week's showlist estimates before forming cash opinions.
  • Strength in live cattle and softer corn prices amid ideas production will rebound this year are supporting feeder cattle futures.

 

Lean hog futures are off to a mixed start with the front-month contract slightly higher and deferred contracts favoring the downside.

  • While the August contract continues to benefit from the $2-plus discount it holds to the cash hog index, other contracts are under pressure.
  • While near-term supplies remain tight, the market expects seasonal supply expansion to soon weigh on the market.
  • This will likely also pressure the product market. But on Friday, the pork cutout value firmed 18 cents, though movement was relatively light at 275.5 loads.
  • Tightening supplies are resulting in steady to higher cash hog bids today, despite negative cutting margin and the fact that two plants are closed today.
     
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