Market Snapshot, Noon CT -- Advice (VIP) -- August 16, 2013

August 16, 2013 07:06 AM
 

SOYBEAN PRODUCERS: INCREASE NEW-CROP CASH SALES... November soybean futures have rallied more than $1 from last week's low to challenge the long-term downtrend on the daily chart. The two previous tests of this trendline in June and July saw buying interest dry up and resulted in bull traps. Therefore, soybean hedgers and cash-only marketers are advised to sell 30% of expected 2013-crop production via cash forward contract for harvest delivery to get to 50% forward priced on new-crop. If futures extend the corrective rally, we'll advise additional cash sales and/or reownership via long call options.

 

Corn futures continue to work lower and are down 8 to 9 cents.

  • Profit-taking after yesterday's surge and strength in the U.S. dollar index are pushing futures lower.
  • Traders' concerns about continuing dry conditions in the western Corn Belt are diminishing as some private services now call for increasing chances of precipitation late next week for North Dakota, Minnesota and northeast Iowa.
  • The trade is still sorting through the impact of Prevent Plant acres on total corn output based on yesterday's initial Farm Service Agency acreage data, which points to much higher prevent plant acres than the market expected. However, traders continue to point out USDA still anticipates a record-large crop. Next week's Pro Farmer Midwest Crop Tour will help shed light on the size of this year's corn crop.
  • Gulf basis is steady in late-morning trading with the exception of December delivery which is a penny higher. Early today, Gulf basis was up 8 cents for immediate delivery but down 10 cents for the latter half August.

 

Soybean futures are fractionally to 3 cents higher through the January contract, while deferred months are steady to 3 cents lower.

  • Position evening ahead of the weekend continues to dominate trading.
  • Weather is gaining some attention as forecasts call for continuing dry conditions in the western Corn Belt well into next week. However, late-morning forecasts have begun showing some precipitation potential for the northern Belt and Great Lakes area, trimming trader concerns about weather somewhat.
  • Traders are starting to look ahead to the Pro Farmer Midwest Crop Tour, which starts Monday. The Tour will provide more insight as to the state of this year's soybean crop.
  • The market gained light support from USDA's announcement China bought 284,000 MT of new-crop beans and unknown destinations purchased 126,000 MT of soybeans for 2013-14 delivery this morning.
  • Traders note end-user buying interest has risen recently, signaling prices are at value levels and possibly some concern about the 2013 crop.
  • Gulf soybean basis is unchanged from earlier today in late-morning trade. Earlier today, Gulf basis fell a dime for August delivery, but firmed 5 to 15 cents for September delivery.

 

Wheat futures are 5 to 7 cents lower for SRW wheat, while HRW and HRS wheat are down around 1 to 3 cents lower.

  • Evening of positions ahead of the weekend has surfaced but prices remain on the defensive today in sympathy with the decline in corn futures.
  • Traders continue to look at large global wheat stocks and concerns U.S. wheat is not competitively priced on the world market. Today's strength in the U.S. dollar index is adding to that negative view.
  • The market is shrugging off news Indian corn exports are expected to plunge 40% in 2013-14 due to crop damage from late-season rates that pushed prices up sharply and news South Korea bought a total of 73,300 MT of U.S. wheat overnight because major purchases have been absent.
  • Gulf SRW basis is unchanged in late-morning trading.

 

Live cattle futures are narrowly mixed. Feeder cattle futures have firmed to post slight to moderate gains.

  • Traders continue to even positions due to the lack of any signs movement in the cash cattle trade.
  • The market continues to expect prices to move $1 higher compared with last week's $121 action in the Southern Plains as showlists are smaller, boxed prices prices have firmed and packer margins are positive.
  • Wholesale beef prices rose today with Choice 69 cents higher and Select 46 cents higher, but movement is a light 91 loads.
  • Feeder cattle futures have firmed thanks to lower corn prices.

 

Lean hog futures are slightly lower in light volume.

  • Profit-taking is the main feature today.
  • Traders continue to look for the seasonal rise in supplies and decline in demand following Labor Day, which is limiting their willingness to bid prices higher despite steady cash hog prices and steep discount of October futures to the cash index. But that wide discount also limits selling interest in the near term.
  • The pork cutout value rose a slim 2 cents this morning and movement is a moderate 175.6 loads.
  • The cash market is mostly steady on positive packer cutting margins.
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