Market Snapshot, 10:00 am CT (VIP) -- June 26, 2013

June 26, 2013 05:10 AM
 

July corn futures are 9 cent higher, while new-crop contracts are mostly 3 to 4 cents higher this morning.

  • Traders are readying positions for USDA's reports Friday. The market expects USDA to cut nearly 2 million acres from its March estimate to 95.34 million acres.
  • But historically, it is the Grain Stocks Report that spurs big market moves. Pre-report expectations are for grain stocks to come in at 2.856 billion bu. as of June 1, compared to 3.148 billion bu. last June.
  • Meanwhile, ethanol production picked up last week to 885,000 barrels per day, up 12,000 bu. from the week prior. Ethanol stocks declined to 16.3 million barrels compared to 16.5 million barrels last week.
  • Flooding in the Corn Belt is also raising corn production concerns. The Ohio Valley, which is actually in need of rain, is expected to receive several inches over the next few days.
  • Otherwise, the market views the 6- to 10-day outlook for below-normal rain and below-average temps as favorable for the the western Belt.

 

Soybean futures are mixed amid some bull spreading, with July up 6 cents and deferred contracts mostly lower.

  • A reminder of tight supplies is lifting old-crop futures this morning. Gulf soybean basis firmed 8 cents for immediate delivery and was 4 to 5 cents higher for July and August delivery this morning, pointing to improved demand.
  • But buying interest in new-crop futures is being limited by expectations for USDA's reports Friday to point to a rebound in production for the coming marketing year.
  • The market expects USDA to raise its soybean acreage estimate from March by 898,000 acres to 78.024 million acres.
  • The market also expects USDA to peg soybean stocks as of June 1 at 441 million bu., which would be down 226 million bu. from last year at this time.
  • While there is more rain in the near-term forecast, traders generally view the forecast as non-threatening for crop development.

 

Wheat futures are narrowly mixed at all three exchanges.

  • Heavy rains in the eastern Midwest raises concerns about SRW wheat quality.
  • Meanwhile, harvest in HRW wheat country is progressing rapidly thanks to dry, hot weather.
  • Minneapolis wheat continues to benefit from concerns about slow planting and development in the region.
  • Traders are also beginning to ready for Friday's key USDA reports. Traders look for USDA to trim spring wheat acreage from March intentions by around 584,000 acres to 12.117 million acres. All wheat acreage is expected to come in at 55.751 million acres, which would be down 689,000 acres from USDA's March estimate.
  • The market expects USDA to peg wheat stocks at 750 million bu., which is near in line with year-ago.

 

Live cattle futures got off to a choppy start but the market has since firmed to post slight gains. Feeder cattle futures are also enjoying slight gains.

  • Live cattle futures are seeing some light short-covering ahead of the start of cash cattle trade. Last week, trade took place at $120 in the Southern Plains and at firmer prices in Iowa and Nebraska. Futures are trading at around a buck trade to the bulk of last week's cash action.
  • Packers are enjoying wide profit margins, but showlist estimates are up slightly in Kansas and Texas, though they are down in Nebraska. However, 100-plus degree temps in the Southern and Central Plains are stressing livestock.
  • Plus, the boxed beef market has failed to impress this week. Choice boxed beef values fell $1.68 and Select declined 66 cents Friday; movement picked up to 172 loads.
  • Firmer corn prices are limiting buying in feeder cattle futures.

 

Lean hog futures got off to a mixed start, but they, too, have firmed to post slight gains.

  • Lean hog futures are slightly firmer, but traders remain on watch for a seasonal top in both futures and the product market.
  • The pork cutout value firmed 79 cents yesterday and movement improved to nearly 300 loads. This marked its 11th gain in 12 consecutive sessions.
  • Cash hog bids are steady to lower again today as demand is limited ahead of the July Fourth holiday-shortened week.
  • But the July contract continues to respect support at the psychological $100 mark. The roughly $3.50 premium the contract holds to the cash hog index is also limiting selling.
  • Mexico announced it is blocking imports of U.S. live pigs in response to the PEDV situation, but the ban does not involve meat exports.
     
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