Market Snapshot, 10:00 a.m. CT (VIP) -- May 24, 2013

May 24, 2013 05:05 AM
 

Corn futures are posting losses mostly around 3 to 4 cents.

  • Traders are reducing risk exposure and booking some profits ahead of a three-day weekend as this increases uncertainty about what the weather and planting outlook will look like when the market reopens Tuesday.
  • Wet, chilly weather this week has most expecting limited planting progress will be reported in USDA's crop progress update Tuesday. Early estimates are for planting to advance to 85% to 92% complete. Emergence is expected to remain well behind the norm.
  • The forecast for the weekend and next week is not favorable for planting advances going forward, especially in the Upper Midwest. This raises the likelihood some acres will be switched to beans, limiting selling interest to profit-taking.
  • News China purchased U.S. SRW wheat and that Taiwan purchased Brazilian corn is adding light pressure, as it reminds of demand destruction.
  • Gulf corn basis is 2 cents softer for immediate delivery this morning, also indicative of lackluster demand.

 

July soybeans are 3 cents lower while the rest of the market is mostly 5 to 6 cents higher amid some bull spread unwinding activity.

  • Falling basis levels around the country as the recent old-crop price rise encouraged farmer selling is pressuring the front-month contract today.
  • Gulf soybean basis declined 10 to 15 cents for May and June delivery this morning, though it firmed 5 cents for early July delivery. Gulf basis for immediate delivery has fallen 45 cents since Monday morning to 85 cents over July futures.
  • Buying enthusiasm is also being limited by news the Argentine port strike has been settled for the time being.
  • Meanwhile, the lagging planting pace for soybean futures remains a source of underlying support, though this is not yet enough to spur active buying as expectations beans will pick up some intended corn acres are still drawing the bulk of the market's attention.

 

Wheat futures are posting losses around 3 to 6 cents in all three markets.

  • Wheat futures continue to follow corn's cue. Thus, futures are facing profit-taking pressure ahead of the weekend.
  • News China purchased 180,000 MT of U.S. soft red winter wheat for 2013-14 delivery (which begins June 1) is confirmation of rumors yesterday. Thus, the market is taking a sell-the-fact approach today.
  • Recent strength in the U.S. dollar index has limited the impact of recent signs of strong demand for U.S. wheat as the market is concerned this could fade.
  • Also, the poor state of the HRW wheat crop is known and thus will likely not support active buying interest until closer to harvest.
  • Uncertainty exists about how much spring wheat planting progress was made over the past week, as cool, wet weather means some fields are still too wet for planting. More rain is expected for the region this weekend, limiting pressure on the Minneapolis market.

 

Live and feeder cattle futures are enjoying slight to moderate gains in early trade.

  • Traders are working to even positions ahead of the extended holiday weekend amid uncertainty as to near-term direction.
  • Cash cattle trade is thought to be complete at $124 in the South, but so far just light sales have taken place in northern locations at $125.00 to $125.50. Trade in both areas so far was down $1.00 to $1.50 from the week prior.
  • But futures remain at a big discount to these cash prices, supporting some short-covering.
  • Also, yesterday's 17-cent rise in Choice boxed beef values marked the ninth consecutive day prices have hit an all-time high. Select cuts fell 67 cents, widening the spread between the cuts to $19.85. But movement slowed again, keeping demand concerns in mind.
  • Traders continue to believe high beef prices are not sustainable considering weak economic growth, high gas prices and the availability of cheaper pork and chicken.
  • Weakness in the corn market and U.S. dollar index is lifting feeder cattle futures.

 

Lean hog futures are favoring the upside in narrowly mixed trade.

  • Cash hog bids are mostly steady today. While packer profit margins are back near breakeven and most have near-term supply needs covered, tightening supplies are discouraging them from lowering bids.
  • Also, traders expect strong demand to support the cash market following Memorial Day, especially is weekend clearance is strong.
  • Yesterday, the pork cutout value slipped 27 cents and movement slowed to 265.7 loads, which is limiting buying enthusiasm today.
  • Weakness in the U.S. dollar index, losses in the corn pit and gains in the cattle market are providing light spillover support.
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