Market Snapshot, 10:00 am CT (VIP) -- May 22, 2013

May 22, 2013 05:08 AM
 

Corn futures have extended overnight gains to trade double-digit higher in old-crop contracts, with new-crop up 7 to 8 cents.

  • Signs of improved demand after the recent price break are lifting the corn market.
  • USDA announced a daily sale to China of 360,000 MT of new-crop corn this morning and an unknown destination bought 180,000 MT of new-crop corn (possibly China).
  • Plus, Gulf basis rose a penny for immediate delivery this morning, signaling more demand news may be ahead.
  • Also, ethanol production rose 18,000 barrels per day (bpd) over the past week to 875,000 bpd, the highest weekly output since June 2012. Ethanol stocks declined 247,000 barrels to 16.18 million barrels last week.
  • The forecast for this week and the next is not favorable for producers getting the remaining 29% of the crop seeded in a timely fashion.

 

Soybean futures have firmed to trade around a nickel higher in old-crop futures and mostly 9 to 10 cents higher in new-crop.

  • Spillover from corn are giving the soybean market a boost today. Old-crop futures are seeing some followthrough buying after these contracts moved to multi-month highs yesterday.
  • Gulf basis fell 5 cents for immediate delivery this morning, signaling increased farmer selling after the recent price rally. But basis remains historically strong.
  • A wet forecast for areas of the Corn Belt signals some corn acres may still be switched to soybeans, but expectations for bean plantings to top USDA's March projection is already factored into prices.
  • The market is ignoring news China National Grain and Oils Information Center says the country has canceled up to 150,000 MT of South American soyoil purchases due cheaper prices for domestic supplies.

 

Wheat futures have improved to post gains around 8 to 10 cents in Chicago and Kansas City, while Minneapolis is posting 1- to 2-cent gains in most contracts.

  • Wheat is following corn higher this morning.
  • The upside move is supported by the poor state of the HRW wheat crop and a behind-normal planting pace in spring wheat country.
  • So far, however, the market has been more focused on ample global wheat supplies.
  • A pickup in planting of spring wheat on the Canadian Prairies is limiting buying in Minneapolis wheat futures.

 

Live cattle futures are posting slight losses in most contracts this morning. Feeder cattle futures are slightly to moderately lower.

  • Live cattle futures are seeing light profit-taking today after the market posted a strong upside day of trade yesterday.
  • While Choice boxed beef values hit yet another all-time high of $210.66 yesterday on a 41-cent rise, Select cuts fell 44 cents and movement remained unimpressive at 145 loads.
  • The market remains unwilling to actively add long positions as traders are concerned that consumers will react unfavorably when retailers pass lofty beef prices on to them.
  • But selling interest is also being limited by the wide discount nearby futures hold to last week's cash cattle trade, with expectations for firmer cash cattle trade this week building.
  • Countering this idea, however, is slightly higher showlists this week and the fact that packers are buying for a holiday shortened week.
  • Strength in the corn market and spillover from live cattle is pressuring feeder cattle futures.

 

Lean hog futures are posting slight gains this morning.

  • Ongoing improvement in the pork market is encouraging followthrough buying in lean hogs today. The pork cutout value rose $1.14 yesterday and movement was decent at 324.4 loads.
  • This also lifted packer profit margins slightly, though they remain near breakeven.
  • Thus, packers are paying steady prices for market ready hogs today as they are having little trouble securing needed supplies.
  • But supplies are seen tightening in the weeks ahead. Average hog weights in southern Minnesota and Iowa declined 0.2 lb. the week ended May 8.
  • The front-month contract is trading in line with the cash hog index.
     
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