Market Snapshot, 10:00 am CT (VIP) -- June 27, 2013

June 27, 2013 05:11 AM
 

Corn futures are under pressure this morning with old-crop contracts 1 to 2 cents lower and new-crop down roughly 4 to 6 cents.

  • The corn market is under pressure amid a lack of buying ahead of USDA's reports Friday.
  • Traders expect USDA to trim planted corn acreage from its March intentions to around 95.34 million acres.
  • The market anticipates USDA will peg June 1 corn stocks at 2.856 billion bushels. The June corn stocks figures has often "surprised" the market over the past three years, which is encouraging some to move to the sidelines ahead of the release.
  • Pressure also stems for a favorably drier weather pattern in the western Corn Belt and some rains that are expected in the far eastern Corn Belt.
  • Weekly export sales of 336,700 MT for 2012-13 and 153,600 MT for 2013-14 came in near the upper end of expectations and more than doubled the previous week's tally.
  • This positive demand signal, along with Gulf basis levels that are steady to 5 cents higher for summer delivery are limiting selling interest in futures.
  • Argentina's government has authorized 16 MMT of corn exports for 2013-14, up 1 MMT from year-ago, to encourage producers to expand acreage in the coming season.

 

July soybean futures are posting double-digit gains, while new-crop contracts are around 4 to 8 cents higher.

  • Signs of improved export demand remind of tight carryover supplies and are giving bulls an edge as traders even positions for tomorrow's USDA reports on acreage and June 1 grain stocks.
  • Expectations are for soybean acreage to be 78.024 million acres, up 898,000 from March intentions, and for soybean stocks as of June 1 to come in at 441 million bu., down 34% from year-ago to remind of tight supplies.
  • Weekly export sales of 14,500 MT for 2012-13 and 451,100 MT for 2013-14 topped expectations and were a notable improvement from recent weeks, signaling demand is solid on any price breaks. China accounted for 360,000 MT of the new-crop sales.
  • Also, USDA this morning announced a 172,500-MT soybean sale to unknown destinations (China?) for 2013-14.

 

Wheat futures have chopped on either side of unchanged this morning. Chicago is mostly 1 to 2 cents lower, Kansas City is mixed, and Minneapolis is slightly higher.

  • Spillover from soybeans and improved risk appetite is lifting wheat futures today. But ongoing winter wheat harvest limits buying interest to short-covering, despite generally poor results in Kansas.
  • Traders are also evening positions ahead of tomorrow's key USDA reports; the acreage report is expected to show a 689,000-acre decline in all wheat acres from March intentions, largely thanks to an expected 584,000-acre drop in spring wheat acreage to around 12.117 million acres.
  • The market expects USDA to peg June 1 wheat stocks at 750 million bushels.
  • Although no official announcement has been made, the Argentine government has told exporters it will not authorize more shipments of wheat/flour for 2012-13 due to soaring domestic bread prices. This could boost demand for U.S. wheat.
  • This morning's weekly export sales of 731,800 MT for 2013-14 surged from last week and topped expectations by a wide margin. Brazil was the lead buyer.

 

Live and feeder cattle futures are enjoying slight gains this morning.

  • August live cattle gapped above the 100-day Moving Average today for the first time since early January, which is spurring some technical buying.
  • Solid gains in the stock market and crude oil futures are also favorable toward commodity buying today.
  • Traders have built around a $1.50 premium into the June contract relative to last week's cash action at $120 in the Southern Plains ahead of the contract's expiration tomorrow. This signals friendly cash cattle expectations for this week.
  • While the boxed beef market has been mixed, improved beef movement, stressful temperatures well over the 100 degrees in the Central and Southern Plains and wide cutting margins could make them more willing to raise bids.
  • Also, weekly beef export sales of 20,000 MT for 2013 more than doubled the tally the previous week, with Hong Kong and Mexico as the lead buyers.
  • Pressure on corn prices is making it easy for feeder cattle to join the livestock rally.

 

Lean hog futures gapped higher on the open and are slightly to moderately higher, with nearby contracts leading gains.

  • Lean hog futures are again moving higher thanks to optimism about ongoing strength in the product market.
  • The pork cutout value rose another 91 cents yesterday and movement was solid at 332.7 loads. The pork cutout has risen 12 of the past 13 days and it is very close all-time highs of the previous voluntary reported pork market.
  • And while there have been some weaker bids this week, profitable packer cutting margins have held most cash prices steady as packers have incentive to keep lines full.
  • Also, the July contract is still at around a $2.50 discount to the cash index.
  • And pork export sales for the week ended June 20 surged to 18,600 MT, a 124% increase over the week prior.
  • Buying enthusiasm may taper later today if traders begin to more actively even positions ahead of tomorrow afternoon's Hogs & Pigs Report, which is expected to reflect all hogs and pigs at 100.6% of year-ago levels.
     
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