Market Snapshot, 10:00 a.m. CT (VIP) -- May 17, 2013

May 17, 2013 05:02 AM
 

July corn is around 5 cents higher, while the rest of the market is fractionally to 5 cents lower.

  • Strength in the U.S. dollar index and active planting progress in the Corn Belt are weighing on the corn market ahead of the weekend.
  • Traders expect Monday's progress report from USDA to show at least 60% of the crop has been planted.
  • But rains are moving across the Upper Midwest this morning and more rain is in the forecast for much of the Midwest early next week, which will slow planting progress.
  • But selling in the front-month is being limited by a 3-cent rise in Gulf basis for immediate delivery as this reminds of tight old-crop supplies.

 

Soybean futures started the day session under pressure, but old-crop futures have improved to trade around a penny higher. New-crop is down 1 to 4 cents on bull spreading.

  • Strong gains in the U.S. dollar index are encouraging traders to reduce risk exposure ahead of the weekend. But early pressure brought some buying interest back to the market.
  • Traders still expect soybeans to pick up some acres from corn planting delays, but active seeding this week has reined in those concerns.
  • Selling is being limited by news Brazil's congress has passed its port modernization bill, which would authorize private ports to hire more non-union port workers. Anger over the measure could increase the risk of port strikes for the near-term if the bill is signed into law. This adds to concerns about tight old-crop bean supplies in the U.S.
  • Gulf soybean basis softened by 5 cents for immediate delivery, but it was steady to a penny higher for deferred delivery.
  • USDA announced a 138,000-MT soybean sale to an unknown destination this morning, with 18,000 MT for 2012-13 and 120,000 MT for 2013-14, as well as a 120,000-MT sale to China for 2013-14.

 

Wheat futures are posting slight losses in Chicago and Kansas City, while Minneapolis wheat has seen mixed trade this morning.

  • Strength in the U.S. dollar index is weighing on the commodity sector today, as consumer sentiment in April rose to a near six-year high. This raises concerns about export demand for U.S. wheat.
  • Rain in the Northern Plains with more in the forecast has boosted the Minneapolis wheat market as this brings spring wheat planting delays back into focus.
  • Market action of late signals that the poor state of the HRW crop is considered factored into prices.

 

Live cattle futures are posting slight losses in all but the front-month, which is steady. Feeder cattle futures are also slightly lower.

  • Cash cattle trade is thought to be complete in Texas after action at $125 yesterday, but at other locations the cash cattle standoff continues.
  • Feedlots believe at least steady trade with last week's $126 action is justified by boxed beef price strength. Plus packers are enjoying wide profit margins.
  • Choice boxed beef values have hit all-time highs six of the last 10 days, including yesterday when Choice cuts firmed 82 cents to $208.77. But this slowed movement to just 116 loads.
  • But slow movement keeps domestic demand concerns in mind as the market remains concerned consumers will resist lofty beef prices.
  • Strong gains in the U.S. dollar index today and for the month of May adds export demand concerns to the mix.
  • The market is also reading for the Cattle on Feed Report this afternoon, which is expected to show On Feed down slightly from year-ago but Placements up around 12 percentage points from year-ago.

 

Lean hog futures are posting slight gains in all but the July contract, which is slightly lower.

  • Continued strength in the pork market is giving bulls the advantage in the pork market.
  • Yesterday, pork cutout values rose another $1.43, pulling packer profit margins back into the black. However, the higher prices did limit movement.
  • Early cash hog bids are mostly steady with a few lower bids as packers work to improve margins as they had been cutting in the red for quite some time.
  • Strength in the U.S. dollar index could limit export demand for pork. This is limiting buying interest ahead of the weekend.
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