Market Snapshot, Noon CT -- Advice (VIP) -- July 31, 2013

July 31, 2013 07:07 AM
 

COTTON CASH-ONLY MARKETERS: FINISH OLD-CROP SALES... The 2012-13 cotton marketing year has come to a close. As a result, cash-only marketers are advised to finish 2012-crop marketings with a 15% sale. Hedgers had previously sold all of 2012-crop cotton in the cash market.
 

Corn futures are mildly higher amid corrective buying.

  • Basis strength and end-of-month positioning are mildly supporting futures in late-morning trade.
  • But attitudes remain negative as traders view the weather as non-threatening for pollination and positive for crop development. Traders are shrugging off concerns of the late-development status of the crop and holes in the western Corn Belt.
  • The wait for China to show up as a buyer of corn continues. Purchases from that important buyer would signal prices had fallen to value levels. Buying interest in futures will be limited to mild short-covering until a pick up in export demand appears.
  • Weekly ethanol production declined 21,000 barrels per day for the week ended July 26 to the lowest level in 16 weeks.
  • Gulf corn basis is unchanged in late-morning trade with the exception of November delivery, which is a penny lower.

 

August soybean futures continue to post gains in the teens, while new-crop contracts are fractionally to 4 cents higher.

  • August soybeans continue to find support from the lack of deliveries and tight supplies as the two-week delivery process gets underway. There were also no deliveries against August soybean meal this morning. However, futures have backed off earlier gains.
  • Short-covering on ideas the downside has been overdone is supporting new-crop futures, but those early gains have been trimmed as well.
  • Traders remain optimistic about the developing crop even though it was very late getting planted and is behind normal in the pace of its development. Weather forecasts calling for cool temperatures with chances for rain are viewed as positive for the crop and traders are comfortable with a minimum amount of weather risk priced into futures.
  • USDA reported a daily sale of 120,000 MT of soybeans for 2013-14 to unknown destinations this morning. That follows a sale of 290,000 MT of soybeans for 2013-14 to an unknown destination on Tuesday. The pickup in demand signals new-crop soybeans have dipped to a "value" level.
  • Gulf soybean basis is unchanged in late-morning trade.

 

SRW and HRW wheat futures are mostly 6 to 8 cents higher this morning. HRS futures started lower, but are mostly 1 to 5 cents firmer.

  • End-of-the-month positioning is supporting prices while the winter wheat markets work on posting a post-harvest low.
  • Export demand for U.S. wheat has strengthened but competition from lower-priced wheat from the Black Sea Region and other exporting countries limits the amount of business headed to U.S. shores.
  • Wheat futures continue to be held back by overall negative attitudes in the corn and soybean markets.
  • Traders continue to look at weather forecasts as favorable for the spring wheat crop, which is limiting their buying interest for HRS futures.
  • Gulf SRW basis in unchanged in late-morning trading.

 

Live cattle futures are narrowly mixed ahead of this afternoon. Feeder cattle futures are narrowly mixed as well.

  • Price action in live cattle futures continues to be light and choppy as traders wait on direction from the cash cattle market.
  • Traders are still looking for seasonal strength in cash cattle and wholesale beef markets but are finding it difficult to get confirmation of the start of that trend.
  • The August contract is seeing some light pressure as it is trading at a premium to last week's cash trade in Kansas and Texas.
  • Boxed beef prices are mixed this morning with Choice beef down 16 cents and Select up 56 cents. More encouraging, though, is the positive movement of 153 loads.
  • Feeder cattle futures are mixed as they follow the choppy lead from live cattle futures and the corrective buying in corn futures.

 

Lean hog futures are stronger this morning with the August contract leading gains.

  • A bounce in the pork cutout value of $1.64 this morning and strong movement of 248.7 loads has traders taking profits via short-covering after yesterday's sharp declines.
  • Traders also feel yesterday's losses were overdone. The resulting corrective buying has left a gap on the daily August lean hog chart. Traders are also working to narrow the discount August hogs hold to the cash lean hog index.
  • Deferred contracts did not gap higher today and are finding resistance at the bottom of yesterday's gap down. Despite the recent upsurge in pork cutout values, traders anticipate pork production will rise seasonally in the weeks ahead.
  • Cash hog bids are steady at most Midwest locations. Cutting margins have moved back into the black but packers are not ready to raise cash bids as they anticipate larger supplies will soon be heading to market.
     
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