Market Snapshot, 10:00 a.m. CT (VIP) -- July 9, 2013

July 9, 2013 05:13 AM
 

Corn futures are mostly 8 to 9 cents higher this morning.

  • Corn futures are benefiting from signs of demand improvement on last week's price break.
  • Gulf basis firmed 2 cents for immediate delivery this morning and an impressive 50 cents for early August delivery to $1.58 over September futures.
  • Basis gains signal more demand news may be ahead.
  • New-crop corn is also benefiting from some technical buying as the December contract closed back above the $5.00 mark yesterday.
  • While USDA's weekly crop condition ratings showed a 1-percentage-point increase in the "good" to "excellent" categories over the past week, development is notably lagging.
  • Just 6% of the corn crop is pollinating, compared to 20% on average. Of note, 0% of the Iowa corn crop is pollinating compared to 11% on average.
  • Despite the crop improvement and rains that are pushing across the western Corn Belt this morning, traders are showing some concern with forecasts for hot temps the second half of the month. That's when the majority of the Corn Belt crop will pollinate.

 

Soybean futures are enjoying double-digit gains across the board.

  • Soybean futures are again benefiting from some corrective short-covering today as well as some technical buying as a number of contracts moved above near-term resistance levels this morning or yesterday.
  • Light support also comes from USDA's weekly crop condition ratings that showed no change in the percentage of crops rated "good" to "excellent." Traders had expected a 1-percentage-point increase.
  • While current rains in the western Corn Belt are beneficial, the extended forecast for above-normal temps is raising some concerns for a development-lagging bean crop.
  • Just 95% of the bean crop is emerged, 2 points behind the five-year average pace and only 10% of the bean crop is blooming, 14 percentage points behind the norm. At 4% blooming, Iowa is a whopping 27 percentage points behind the average pace.
  • Gulf basis firmed 5 cents for July delivery and 10 cents for delivery the first half of September this morning, signaling end-users are also taking advantage of the recent price break to book bean supplies.
  • Conab, the supply agency of the Brazilian government, modestly raised its soybean crop estimate to a record 81.5 MMT from 81.3 MMT previously. But this is having little to no market impact as traders have known for a long time Brazil had a record crop.

 

Wheat futures are the upside leader this morning. Chicago and Kansas City wheat are enjoying gains in the teens. Minneapolis is up 9 to 11 cents, with the exception of the front-month contract, which is 25 cents higher.

  • Wheat is benefiting from recent strong Chinese purchases totaling 1.32 MMT of SRW wheat over the past week. Weekly export inspections were also strong yesterday.
  • Also, USDA's Crop Progress Report Monday confirmed harvest has moved past the halfway point, which means hedge pressure is easing.
  • The market is also seeing some technical buying and short-covering after the market's strong close yesterday.
  • Minneapolis wheat is benefiting from concerns about the slow development of the spring wheat crop. It is 45% headed, compared to 53% on average and 85% last year.
  • But somewhat offsetting this is a 4-point increase in the amount of the crop rated "good" to "excellent" to 72%.
  • Russian officials signal dryness in some production areas may trim this year's wheat crop, though the official forecast has not been lowered. It remains at 54 MMT.

 

Live cattle futures are steady to lower in early trade. Feeder cattle futures are posting moderate to sharp losses.

  • A disappointing start to the week for the boxed beef market is giving traders incentive to reduce the premium futures hold to last week's cash trade.
  • Choice cuts fell $1.49 and Select fell $2.60 yesterday on light movement of just 143 loads yesterday.
  • This signals it may be difficult for the cash market to strengthen, despite slightly tighter showlist estimates in Kansas and Texas this week.
  • Last week's sales took place at mostly $119 in the Southern Plains and at $120 to $121 in northern locations. The front-month contract is at a $3 premium to last week's action in Texas and Kansas.
  • But market participants remain on watch for a low in the beef and cash markets.
  • Strength in the corn market and the roughly $10 premium feeder futures hold to the cash index are weighing on feeder cattle futures.


Lean hog futures are mixed in early trade.

  • Heat and humidity in the Midwest is causing some producers to hold off on marketing hogs. Nevertheless, early cash hog bids are steady, despite marked improvement in packer cutting margins. Some lower bids are anticipated.
  • The pork cutout value firmed 96 cents yesterday, but movement was light to start the week. This adds to concerns the product market is working on a seasonal top.
  • But the downside remains limited by concerns about the spread of PEDV.
  • Also, futures remain at nearly a $3 or more discount to the the cash hog index.
     
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