Market Snapshot, 10:00 am CT (VIP) -- June 19, 2013

June 19, 2013 05:07 AM
 

Corn futures are 4 to 8 cents higher with new-crop contracts leading gains.

  • Corn futures are enjoying followthrough buying after yesterday's technically significant gains. The July contract closed the wide April 1 gap yesterday and closed above the 100- day Moving Average for the first time since that date.
  • Also, firmer Gulf basis levels of late remind of tight supplies and signal export demand may be improving. This morning, Gulf basis firmed 7 cents for immediate delivery, 3 cents for July delivery and 5 cents for late-August delivery. Other delivery months held steady.
  • Ethanol production over the past week fell 11,000 barrels per day compared with the week prior to 873,000 barrels per day. Ethanol stocks rose 500,000 barrels to 16.5 million barrels.
  • While warmer temps are favorable for crop development, more rain is in the forecast for the upper Midwest this week. This keeps new-crop production uncertainty in mind.

 

Soybean futures have firmed to post gains of 2 to 8 cents, with new-crop futures leading gains.

  • Ideas the downside has been recently overdone considering tight old-crop supplies and new-crop production uncertainty is encouraging some short-covering this morning.
  • Growers are taking advantage of a few days of warm, dry weather to get remaining acres seeded, but the late planting date into saturated soils raises yield concerns.
  • Support also stems from news China National Grain and Oils Information Center sees the country's soybean imports rising to 6.9 MMT this month, which would be up 1.8 MMT from May.
  • The U.S. ag attaché in China has trimmed the forecast for 2012-13 soybean imports by 3.5 MMT to 59.5 MMT and it raised its 2013-14 import forecast by 2 MMT to 67.5 MMT. USDA pegs old-crop imports to China at 59.0 MMT and new-crop at 69 MMT.
  • And recent improvement in Gulf basis signals more export demand news may be ahead. Gulf basis rose 4 cents for June delivery and 3 cents for early July delivery this morning.

 

Wheat futures are off to a much stronger-than-expected start this morning with futures enjoying gains mostly around 10 to 13 cents.

  • Wheat futures are enjoying spillover support from corn and soybeans as well as some technical-based buying. Nearby Chicago wheat futures moved back above the psychological $7.00 level this morning.
  • But gains in Chicago and Kansas City wheat could be temporary as harvest is underway.
  • And news that India will talk about increasing its wheat exports of government reserves on Friday is reminding traders about the plentiful global supply situation.
  • Meanwhile, Minneapolis wheat continues to benefit from concerns about delayed development of the spring wheat crop.

 

Live cattle futures are solidly higher in early trade. Feeder cattle are mostly slightly higher.

  • Traders are engaging in some light short-covering this morning as they wait for cash cattle trade to begin.
  • Very light sales took place yesterday in Iowa at $121.50 -- steady with week ago -- but trade is not expected to pick up in earnest until Thursday or Friday.
  • Initial bids are expected to emerge this afternoon.
  • Mixed action in the boxed beef market this week signals feedlots will have a hard time getting better than steady prices for the cash cattle, especially considering heavier showlists this week.
  • Choice boxed beef values slipped 95 cents yesterday, while Select was up 36 cents. Movement improved to 197 loads.
  • Expectations for Friday's Cattle on Feed Report to show all categories below year-ago is also providing light support.
  • Strength in the corn market is limiting gains in feeder cattle futures.

 

Lean hog futures gapped higher on the open and are enjoying moderate to sharp gains, with nearby contracts leading the charge.

  • Traders are working to narrow the nearly $3 discount nearby contracts hold to the cash hog index. Early gains spurred technical buying.
  • Tight supplies and improvement in the pork market are also supportive.
  • Yesterday, the pork cutout value improved $1.90 on decent movement of 345.5 loads.
  • Gains in the product market have lifted packer profit margins, making them more willing to pay steady to firmer prices for market ready hogs. Today, bids are mostly steady, with some firmer bids expected.
  • Concerns about the spread of the PEDV virus is an underlying source of support, as this could further tighten supplies.
  • Traders are not overly concerned about expectations for Friday's Cold Storage Report to reflect frozen pork supplies near 663 million lbs., down 5.1% from last month but 18.6% above the five-year average. Large stocks have been the norm this year.
     
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