Market Snapshot, 10:00 am CT (VIP) -- June 18, 2013

June 18, 2013 05:12 AM
 

Corn futures are 6 to 8 cents higher in most contracts this morning. July corn futures have faded back to near unchanged.

  • Technical buying lifted July corn as the contract moved to its highest level since March this morning. The contract closed the April 1 downside gap at $6.76, but buying interest has since faded amid bull spread unwinding.
  • Fundamental support stems from concerns about the slow development of the U.S. corn crop, which heightens concern about tight old-crop supplies. Nine-two percent of the corn crop was emerged as of Sunday compared to 97% on average.
  • But the Pro Farmer weighted Crop Condition Index improved 1.7 points from last week due to slight improvement in the Illinois and Minnesota crops. Iowa and Indiana crop condition ratings slipped last week.
  • More rain in the forecast for the upper Midwest this week and for the Corn Belt next week raises concerns about additional quality deterioration ahead.
  • Meanwhile, firmer cash corn prices remind of tight carryover supplies.
  • Spillover from soybeans is also supportive.

 

Soybean futures have rallied to trade double-digit higher in old-crop futures, while new-crop contracts are 3 to 8 cents higher.

  • July soybean futures are being supported by strength in the cash market as farmer selling remains light while domestic and export demand compete for tight supplies.
  • A reminder of the slow soybean planting pace yesterday is lifting futures. USDA reports 85% of the crop is planted, which fell short of traders' expectations and reflects around 11.6 million intended acres were unplanted as of Sunday. Only 66% of the crop has emerged versus the five-year average of 80%.
  • While growers should be able to get back in the field this week, several inches of rain are expected for the upper Midwest this week. And above-normal precip is expected again next week.
  • Pro Farmer's initial Crop Condition Index for soybeans kicked out a rating of 361.37 points (0 to 500 point scale), which is up from 344.20 last year at this time but down roughly 2 points from the initial rating (on June 3) last year.
  • Support also stems from USDA's announcement China purchased 240,000 MT of new-crop soybeans.

 

Wheat futures are roughly 6 to 8 cents higher in Chicago and Kansas City, while Minneapolis is roughly 2 to 5 cents higher.

  • Wheat futures are benefiting from spillover support from the corn and soybean markets. A weaker U.S. dollar index is also mildly supportive.
  • Also, the market was reminded of both slow winter wheat harvest and slow spring wheat planting and emergence yesterday.
  • But a drier forecast for the Central and Southern Plains this week should lead to an uptick in progress and thus an increase in hedge pressure.
  • USDA reports 11% of the winter wheat crop was harvested as of Sunday, which is behind the five-year average of 25%.
  • Spring wheat planting is 92% complete, including just 86% complete in North Dakota. Emergence is 10 percentage points behind the average pace at 84%. Just 74% of the North Dakota spring wheat crop is emerged, compared to 92% on average.
  • Despite USDA's comments that the GMO wheat finding was an isolated incident, South Korea and Japan continue to ban U.S. western white wheat.

 

Live cattle futures are posting slight losses in most contracts to start the session. Feeder cattle futures are moderately lower.

  • Live and feeder cattle traders are taking advantage of yesterday's firmer close by booking some profits today.
  • Also, while Choice cuts rose $1.66 and Select firmed 24 cents yesterday, this held movement to just 146 loads. This keeps demand concerns in mind.
  • This week's cattle showlist is up sharply from last week after supplies were carried over for two consecutive weeks.
  • This could give packers the advantage in this week's cash negotiations, though they are enjoying wide profit margins.
  • Last week, trade took place at mostly $120 in the Southern Plains, down $2 from the week prior but slightly above June and August futures.
  • Strength in the corn market is also adding profit-taking incentive for feeder cattle traders.

 

Lean hog futures are slightly to moderately higher in early trade.

  • Buying and selling interest is limited in the lean hog complex today as traders weigh mixed fundamental factors.
  • While the pork cutout value rose 22 cents yesterday, movement slowed to just 237.3 loads.
  • Supplies are tightening, but packers have scaled back kill hours to improve margins. This along with recent pork price improvement has pulled packer profit margins into the black.
  • Today, the cash hog market is mostly steady.
  • Traders are still trying to determine whether a top is in after the market surged to multimonth highs last week.
     
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