Market Snapshot, 10:00 am CT (VIP) -- June 24, 2013

June 24, 2013 05:04 AM
 

Corn futures are 8 to 11 cents lower in early daytime trade on negative outside markets and perception that "rain makes grain."

  • Corn futures remain under pressure this morning due to strength in the U.S. dollar and weekend rains.
  • Traders are taking more weather premium out of the market due to attitudes that "rain makes grain" after weekend rains moved across the Corn Belt. There is more rain in the near-term forecast.
  • A change in the weather pattern is coming, though. Sunday's National Weather Service 6-to 10-day forecast calls for below-normal precip across the western Corn Belt and above-normal precip across the eastern Corn Belt.
  • Traders' focus through the week will switch as they begin to more actively even positions for Friday's Acreage and Grain Stocks Reports.
  • December corn futures gapped lower on the open, briefly moved off session lows, but have since extended losses. Next psychological support is at $5.40.

 

Soybean futures have turned mixed, with July beans up 9 cents on bull spreading. New-crop futures are favoring a weaker tone.

  • After ending the overnight session with double-digit losses in most contract, soybean futures are enjoying short-covering amid bull spreading.
  • Strength in Gulf soybean basis, which improved 8 cents this morning for immediate delivery, is contributing to bull spreading.
  • Investors are broadly taking a "risk-off" stance after the People's Bank of China told the country's largest banks to rein in risky loans to improve their balance sheets. This is rattling global markets.
  • Traders are anxiously awaiting this afternoon's progress report. Expectations are a large portion of unplanted bean acres were seeded last week.
  • After gapping lower in overnight trade and extending losses, November soybean futures have filled the gap and are now pivoting around $12.70.

 

Chicago and Kansas City wheat futures extended overnight declines and are posting double-digit losses this morning. Minneapolis wheat is mostly 2 to 6 cents lower.

  • Chicago and Kansas City wheat futures have extended early losses on stepped-up harvest-related pressure. So far losses in Minneapolis have been limited by concerns about the spring wheat crop.
  • Adding to the negative tone is strength in the dollar index, which is contributing to overall weakness in the commodity markets this morning.
  • After a delayed start, harvest activity in Kansas picked up over the weekend, which is adding to weakness in winter wheat futures. Traders are also noting that as harvest progresses through Kansas, better yields and test weights are generally being reported.
  • September Chicago wheat futures hit sell stops shortly after the start of daytime trade and are now hovering above support at last week's low of $6.82 1/4.

 

Live cattle futures are mixed this morning, with nearby contracts leading gains.

  • Live cattle futures are mixed as expected, with traders sorting through Friday's USA reports.
  • The Cattle on Feed Report got a slightly negative read as it showed On Feed slightly above expectations at 97% of year-ago levels. The report showed Placements at 98% and Marketings at 97% of year-ago.
  • But the Cold Storage Report is somewhat easing traders' concerns about beef demand, as it showed beef stocks at the end of May down 6.2% from the previous month and down around 4% from year-ago levels.
  • As a result, all eyes will be on the boxed beef market this morning.
  • Light to moderate cash cattle trade was reported last week in the Plains at steady levels with the previous week. Early expectations are that this week's showlist is up from last week.
  • But packer demand for cash supplies is also expected to be stronger this week after back-to-back weeks of light cash cattle activity.

 

Lean hog futures are slightly to sharply higher this morning, with nearby contracts leading gains.

  • A slightly better-than-expected Cold Storage Report is lifting hog futures this morning. USDA reports total frozen pork stocks at the end of May dropped 5.6% from the previous month and were smaller than traders feared.
  • But pork stocks came in 4.1% above year-ago levels, which still represents a plentiful supply situation.
  • Futures are also seeing a boost after pork cutout values improved $1.60 on Friday to lift packers' profit margins.
  • Traders are also trimming the discount nearby futures hold to the cash index, which signals they have an improved attitude toward the cash market.
  • The cash hog market is mostly steady this morning, but cash sources say demand is varied and key will be if pork movement picks up this week.
  • August live cattle futures filled in last week's gap area and are challenging resistance at last week's high of $99.35.
     
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