Market Snapshot, 11:30 a.m. CT (VIP) -- Advice -- July 3, 2013

July 3, 2013 06:43 AM

WHEAT PRODUCERS: MAKE 2013-CROP WHEAT SALES... Wheat futures violated support at the spring lows last week and have been unable to recover back above that old support despite Chinese demand. As a result, we are removing some downside risk by making new-crop cash sales. Wheat hedgers are advised to sell 50% of 2013-crop production in the cash market. Cash-only marketers are advised to make a 25% new-crop sale. We are being more aggressive with sales for hedgers as they can re-own a portion of sales in long futures or call options if wheat futures post a seasonal low and show signs of an extended price recovery.


NOTE: Grain futures close at noon CT today, while livestock markets close at 12:15 p.m. CT. Therefore, we are sending our noon update a little earlier than normal.


Corn futures are 7 cents higher in the July contract and fractionally to a penny lower in new-crop contracts.

  • Position evening ahead of the holiday tomorrow is dominating trading as futures markets will close early today.
  • News China purchased three cargoes of new-crop U.S. corn at a price well below their domestic supplies is seen as a sign corn has reached value levels and was supportive, especially for the front-month contract, in early trade. But some of that support has eased.
  • Gulf basis is steady to 2 cents higher at midday after posting gains this morning.
  • But news Informa Economics reportedly expects USDA to forecast U.S. 2013 crop corn production at 14.259 billion bu. in its July Supply & Demand Report is pressuring new-crop futures. The firm also reportedly expects a national average yield of 160 bu. per acre.
  • The forecast for the central and western Corn Belt is still seen as favorable for new-crop growing conditions and is putting light pressure on new-crop futures.
  • Ethanol production over the past week slowed by 22,000 barrels per day (bpd) to 863,000 bpd; ethanol stocks declined by nearly 1 million barrels to 15.4 million barrels.
  • December futures have traded within 1/4 cent of closing the downside gap under $5.10 left on Monday.


Soybean futures are posting double-digit gains for the July contract, while August is up 6 cents and new-crop contracts are seeing gains of 4 to 5 cents.

  • Position squaring ahead of tomorrow's holiday is the main feature of late-morning trade.
  • Thoughts China may be looking for value buys in the bean market following reports it had bought new-crop corn is lifting the market, as well.
  • New-crop futures are also benefiting from position squaring, but the bull-spreading continues as the forecast for the central and western Corn Belt is seen as positive for new-crop growing conditions.
  • News Informa Economics reportedly expects USDA to forecast soybean production at 3.376 billion bu. in July on a national average yield of 43.9 bu. per acre is also limiting buying interest in new-crop contracts.
  • Some traders are seeing a positive in November futures trading above Monday's high and above recent support under $12.40.
  • Gulf soybean basis is 2 to 5 cents higher at midday for late-July and August delivery.


Wheat futures are roughly 1 to 10 cents higher, with Chicago leading gains.

  • Wheat futures continue to gain support from talk China has booked around 700,000 MT to 800,000 MT of "overseas wheat" on the price break. Today, USDA confirmed a 360,000 MT SRW wheat sale to China for 2013-14. China also recently bought six cargoes of Australian wheat.
  • Traders cite reports of a major decline in Chinese wheat production as well as quality concerns as a positive for U.S.
  • The winter wheat harvest is thought to have crossed the halfway point and that has some traders thinking the market may have posted its harvest low.
  • Informa Economics Reportedly expects the all wheat crop estimate from USDA to come in at 2.016 billion bu., with all winter wheat production at 1.476 billion bushels.


Live cattle futures are slightly higher in most contracts this morning. Feeder cattle futures are mixed.

  • So far, just very light cash cattle trade has been seen in Iowa at $122, which was within last week's range for the region. With bids and asking prices far apart ahead of the holiday at $117 and $122, respectively, in Kansas, trade may hold off until Friday.
  • Last week, trade took place at mostly $120 in the Southern Plains. Traders have a $2-plus premium built into the front-month's price, signaling the market expects at least steady trade, considering tighter showlists and wide packer profit margins.
  • Choice and Select cuts are stronger this morning with Choice up 98 cents and Select up $2.01. Movement also improved to 119 loads.
  • Feeder cattle are seeing mixed trade as corn futures find support.


Lean hog futures are modestly higher in summer-month contracts and mixed in deferred months.

  • Position squaring ahead of the July Fourth holiday continues to dominate trade.
  • Summer futures are finding support from the cash hog market which is $1.50 premium to the July futures contract.
  • Some packers are still in need of supplies for Friday and Saturday's kill, and are thus keeping bids mostly steady amid wide profit margins.
  • So far the market has shrugged off the $5.69 drop in the pork cutout reported today. Somewhat offsetting that news is the strong movement of 323.2 loads.
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