Market Snapshot, Noon CT -- (VIP) -- July 8, 2013

July 8, 2013 07:02 AM
 

Corn futures are higher across the board with new-crop futures leading with gains of 8 to 9 cents.

  • Traders are favoring the buy side of new-crop corn futures on news Mexico has purchased 120,000 MT of new-crop corn. With that sale coming in the wake of the recent rise in the dollar index, traders believe corn prices may have reached a level that is stimulating demand.
  • Meanwhile, traders look for this afternoon's crop condition update from USDA to show a one-percentage-point gain in crop rated "good" to "excellent" from last week.
  • While the near-term forecast as seen a favorable to the growing crop, some private forecasters are predicting heat to return to areas of the Corn Belt next week, which is adding to support in the market ahead of midday.
  • December futures continue to pivot around the psychological $5.00 area and have a lot of work ahead in order to signal a low has been posted.
  • Gulf basis is providing some lift to futures as well as it has climbed by 1 cent for last-half July delivery, is up 8 cents for first-half August delivery and is up 3 cents for last-half August delivery.

 

Soybean futures have extended gains to trade 17 to 22 cents higher ahead of midday.

  • Early support came from news an unknown buyer purchased 135,000 MT of soybeans and China purchased 120,000 MT -- all for 2013-14. Traders believe his signals new-crop prices are at value levels.
  • Futures have extended gains on reports that some private forecasters look for heat to return to the Corn Belt next week, which raises concern about stressful growing conditions.
  • Meanwhile, traders look for this afternoon's crop condition rating to show 68% of the crop is rated "good" to "excellent." If attained, that is the highest reading for this time of year since 2003 when the crop was rated 70% "good" and "excellent."
  • The favorable near-term weather forecast is being pushed to the side as traders work to even positions and focus on next week's hotter outlook.
  • Traders are shrugging off negative news from Gulf basis which shows nearby futures with the first-half July delivery now down 7 cents and second-half July down 14 cents.

 

Wheat futures are 4 to 7 cents higher in Chicago, mostly 2 to 7 cents higher in Kansas City and steady to 4 cents higher in Minneapolis.

  • Short-covering and new demand news is lifting wheat futures along with some spillover strength from corn and soybean futures.
  • USDA announced this morning that China purchased 840,000 MT SRW wheat for 2013-14. Given recent strength in the U.S. dollar index and the sales announced last week, these purchases has traders thinking U.S. prices have returned to value levels.
  • A pickup in demand for U.S. wheat comes when the bulk of harvest-related hedge pressure should be behind the market.
  • Wheat futures are also getting a lift on news Japan plans to resume purchases of U.S. western white wheat sometime in August.
  • The Institute for Agricultural Market Studies (IKAR) has cut its Russian wheat forecast due to dry weather across key production regions from 54 MMT to 52.4 MMT.
  • Gulf basis is providing some lift as July delivery for SRW is up 7 cents. Other months are unchanged from early trading.

 

Live cattle and feeder cattle futures are slightly higher.

  • Live cattle futures are seeing limited buying interest on the weaker cash cattle trade report last week.
  • This morning's boxed beef trade is negative with the Choice marked down 83 cents and Select discounted $1.64. Movement is a slow at 74 loads changing hands this morning.
  • Last week's light cash cattle trade came in $1 lower than the previous week at $119.
  • This week's showlist is expected to be up slightly from last week as many feedlots carried supplies over, raising concerns about lots becoming backed up.
  • Feeder cattle on being pressured by a rise in feed costs but are getting a lift from the slightly firmer live cattle futures.

 

Lean hog futures are weaker with the August contract sharply lower.

  • Pork traders are reacting negatively to the reduction in the pork cutout today. USDA reports prices declined by 84 cents and movement is a low 128.2 loads.
  • The cash hog market is mostly steady to firmer as many plants are short bought following the holiday and need supplies for early week delivery.
  • July lean hog futures are trading at around a $1 discount to the cash index, while August hogs will soon be the lead-month contract and hold a steeper $6 discount to the index.
  • August lean hog futures hit sell stops on the move through last week's low of $95.95. A low-range close would suggest a near-term high is in place.
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