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

May 10, 2013 05:07 AM
 

Corn futures are posting losses of mostly 8 to 12 cents.

  • Corn futures are seeing some selling pressure after yesterday's gains and ahead of USDA's Supply & Demand Report, which will include USDA's first projection of corn carryover for 2013-14. Expectations are for USDA to peg these at 1.973 million bushels.
  • The market expects USDA to modestly trim its 2012-13 carryover estimate to around 754 million bu. from 757 million bu. last month.
  • This tight supply picture means that planting concerns remain close at hand. If the reports holds no surprises, attention will likely quickly shift back to the weather.
  • Recent rain in the Corn Belt and chilly temps will keep farmers out of the field for the near-term, but next week some should be able to get back to planting.
  • Gulf corn basis firmed 2 cents for immediate delivery this morning.

 

Soybean futures have firmed on spreading with corn to trade 2 to 8 cents higher in old-crop contacts. New-crop futures are mostly weaker.

  • The market is engaging in spreading activity with corn as traders await the release of USDA's 11:00 a.m. CT reports.
  • The reports are expected to reflect tight ending stocks of 124 million bu. for 2012-13 and a rebound in production and thus carryover to 239 million bu. for 2013-14.
  • Light support also comes from news China National Grain and Oils Information Center says the cost of importing beans is likely to fall this month, which could boost soybean demand.
  • But highly negative outside markets are limiting buying in the commodity sector as a whole.

 

Wheat futures are under pressure with Chicago and Kansas City double-digit lower and Minneapolis 6 to 9 cents lower.

  • Strength in the U.S. dollar index and losses in the corn market are giving bears an edge as they ready for the release of USDA's reports.
  • The market expects USDA to peg all wheat production at 2.059 million bu. and all winter wheat production at 1.477 million bushels.
  • Pre-report expectations show the market expects USDA to leave its 2012-13 carryover peg at 731 million bu. and for it to peg new-crop carryover at 627 million bushels.
  • But the market also expects world wheat supplies to rebound to 186.4 MMT in 2013-14.
  • The 6- to 10-day forecast calls for above-normal precip chances for areas of Kansas and Oklahoma, which is adding to pressure on Kansas City wheat.

 

Live cattle futures opened under pressure, but they have since improved to mixed trade. Feeder cattle futures are also choppy.

  • Demand concerns remain high, despite yesterday's continued run-up in boxed beef prices. Choice values rose 82 cents yesterday to another high of $205.49. Select cuts also firmed 40 cents, but the higher prices slowed movement to just 131 loads.
  • News that McDonald's will phase out one-third pound Angus burgers from its U.S. menus due to high beef prices adds to demand concerns.
  • The $2 to $4 drop in cash cattle prices this week also signals packers are concerned about beef demand. Some additional sales took place at $126 in Kansas yesterday, steady with prices earlier this week but down $2 from last week.
  • Additional cash cattle trade is seen as likely in northern locations as some feedlots have passed on lower cash prices, as they see record beef prices and now-positive packer profit margins as justifying better prices.
  • Spillover from live cattle and negative outside markets are encouraging some light selling in feeder cattle futures.

 

Lean hog futures are posting slight losses today.

  • Lean hog futures are being pressured by steady to lower cash hog bids today as packers are caught up on near-term needs and are working to improve deeply negative profit margins.
  • The pork cutout value has improved in recent sessions, but seasonally tightening supplies have caused packers to pay up for market-ready hogs.
  • Yesterday, the pork cutout value rose $1.35, but movement slowed to 357.8 loads.
  • China has announced it will stockpile pork in state reserves in hopes of stabilizing domestic prices. This raises expectations of stepped-up imports.
  • This week, the gap between nearby futures and the cash hog index has narrowed substantially. The May contract is now just roughly $1.50 above the index, while the June contract is in line with the index.
  • Outside markets are also a source of pressure as the U.S. dollar index is sharply higher again today.
     
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