Market Snapshot, Noon CT -- (VIP) -- August 27, 2013

August 27, 2013 06:57 AM
 

Corn futures continue to face light pressure at midday, with the front month 9 cents lower and new-crop contracts mostly 5 to 6 cents lower.

  • Temps in the 90s across the Corn Belt with no rain in sight is thought to be stressing a corn crop that is already dealing with drought-depleted soils. This is limiting selling interest to profit-taking and it could encourage a rally into the close.
  • High temps are expected to persist through Sept. 5, though there are above-normal precip chances for much of the Belt over the 6- to 10-day outlook.
  • Gulf basis levels slid this morning and held steady at midday, signaling increased farmer sales on the rally.
  • Yesterday, funds made a major reduction to their net short position, though they still hold a substantial net short position.

 

Soybean futures have softened to narrowly mixed trade at midday with deferred months favoring the downside.

  • Soybeans have seen choppy trade this morning as traders oscillate between buying on yield damage concerns and profit-taking.
  • November beans are seeing some technical pressure today as the contract was unable to push above contract high resistance this morning.
  • But since the fundamentals are fully bullish, selling interest will remain limited to technical or profit-taking-based action.
  • Heat and dryness in the Corn Belt are reducing the bean crop's yield potential. And this slide is expected to continue as the forecast calls for heat to persist next week.
  • USDA yesterday rated 58% of the bean crop as "good" to "excellent;" more declines are likely next week.

 

Wheat futures have improved to post slight gains in all three flavors, with HRS wheat leading gains.

  • Wheat futures are enjoying light followthrough buying today amid signs U.S. export demand is faring better than thought in the face of higher supplies globally.
  • HRS wheat is also benefiting from concerns about harvest delays that are expected to persist this week due to rain in the Northern Plains. Spring wheat harvest was 42% complete as of Sunday, 12 points behind the five-year average pace.
  • Also, the market anticipates weakness in the corn market will be short-lived as conditions are expected to remain unfavorable for the Midwest corn crop.
  • Outside markets are providing mixed signals this morning as the U.S. dollar index is under pressure, but so is the stock market.

 

Live cattle futures continue to post slight losses at midday, while feeder cattle futures are slightly to sharply higher.

  • Profit-taking continues to weigh on the live cattle market as does uncertainty as to this week's cash prospects. Nearby futures are near in line with last week's $123 action on the Southern Plains.
  • Showlists are up this week but the boxed beef market improved this morning. Choice cuts firmed 43 cents and Select rose $1.00, but movement was again light at 84 loads.
  • Recent slow movement keeps demand concerns in focus.
  • Some are worried consumers will resist high beef prices after Labor Day, putting a wrench in the seasonal tendency for a rally in the beef and cash market into fall.
  • Softer corn prices, a weaker dollar and ideas the downside was overdone yesterday are lifting feeder cattle futures.

 

Lean hog futures have firmed to post slight to moderate gains in all but the February contract, which is slightly lower.

  • Lean hog futures have firmed thanks to marked improvement in the product market today. The pork cutout value surged $4.01 this morning, largely thanks to a $18.16 jump in belly prices. Movement also picked up a bit to 175.8 loads.
  • This widens already strong packer profit margins. Nevertheless, most packers are keeping bids steady to lower today as demand is limited and supplies are readily available.
  • The surge in corn and soy prices this week is also thought to be causing producers to rethink expansion plans for 2014, supporting deferred contracts.
  • Heat in effect and in the forecast is also raising some near-term supply concerns.
  • Nearby contracts are also benefiting from the steep discount they hold to the cash hog index, though the index has been trending steadily lower.
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