Market Snapshot, 10:00 a.m. CT (VIP) -- July 3, 2013

July 3, 2013 05:13 AM
 

Corn futures are up a penny in the front-month July contract and 1 to 3 cents lower in new-crop contracts.

  • China recently purchased three cargoes of new-crop U.S. corn at a price well below their domestic supplies. Chinese demand signals corn has reached value levels.
  • Gulf corn basis rose 4 cents for immediate delivery, signaling more demand news may be ahead. Strength in interior basis is also indicative of tight carryover supplies.
  • But offsetting this is favorably mild and drier weather for the Corn Belt, with just occasional showers in the forecast for the central and western Belt.
  • Ethanol production over the past week slowed by 22,000 barrels per day (bpd) to 863,000 bpd; ethanol stocks declined by nearly 1 million barrels to 15.4 million barrels.
  • The market is also engaging in some position evening ahead of the July Fourth holiday.

 

Soybean futures are enjoying gains of 8 to 13 cents for old-crop contracts, while new crop is mostly 4 to 6 cents higher.

  • Soybean futures are enjoying some bargain buying amid ideas the downside has been overdone and ideas China may be looking for value buys in the bean market as well.
  • This is giving bulls the edge as they even positions ahead of the July Fourth holiday.
  • Buying in new-crop futures is being limited by generally favorable growing conditions in the Corn Belt and a rise in USDA's condition ratings that mask still unplanted or emerged acres in key production states.
  • Gulf soybean basis is 2 cents firmer for immediate delivery, signaling tight supplies and/or improved export demand.

 

Wheat futures are roughly 1 to 6 cents higher, with Chicago leading gains.

  • Wheat futures are being supported by talk China has booked around 700,000 MT to 800,000 MT of "overseas wheat" on the price break. Today, USDA confirmed a 360,000 MT SRW wheat sale to China for 2013-14. China also recently bought six cargoes of Australian wheat.
  • A major decline in Chinese wheat production as well as quality concerns proved a boon for the U.S.
  • Traders will receive a weekly export sales update when they return Friday.
  • Plus, the market is also working to put in a harvest low as winter wheat harvest is thought to have crossed the halfway point by this time.

 

Live cattle futures are slightly higher this morning. Feeder cattle futures, on the other hand, are slightly lower.

  • So far, just very light cash cattle trade has been seen in Iowa at $122, which was within last week's range for the region. With bids and asking prices far apart ahead of the holiday at $117 and $122, respectively, in Kansas, trade may hold off until Friday.
  • Last week, trade took place at mostly $120 in the Southern Plains. Traders have a $2-plus premium built into the front-month's price, signaling the market expects at least steady trade, considering tighter showlists and wide packer profit margins.
  • But while Choice and Select cuts firmed 46 cents and 84 cents, respectively, yesterday, movement was relatively light at 168 loads.
  • The fact that new-crop corn futures have respected support at $5.00 in recent sessions and firmer prices today are pressuring feeders as some had hoped for a major break in feed prices. This is encouraging some profit-taking after recent gains.

 

Lean hog futures are solidly higher in summer-month contracts and mixed with an upside bias in deferred months.

  • Strength in the cash hog market is supporting nearby lean hog futures. July futures remain at a $1.50-plus discount to the cash index.
  • Some packers are still in need of supplies for Friday and Saturday's kill, and are thus keeping bids mostly steady amid wide profit margins.
  • Average hog weights in Iowa and southern Minnesota declined 0.6 lb. the week ended June 29, but are 3.4 lbs. above year-ago.
  • Recent declines in the cash index mean traders are still on watch for a market-top.
  • Also limiting buying interest is a $1.56 slide in the pork cutout value yesterday, though movement picked up to 405.8 loads.
     
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