Market Snapshot, Noon CT (VIP) -- August 12, 2013

August 12, 2013 07:08 AM
 

Corn futures immediately firmed in reaction to USDA's report data and are currently 4 to 6 cents higher.

  • After a weaker start, corn futures firmed in reaction to USDA's lower-than-expected crop estimate.
  • Traders expected USDA to raise the size of the corn crop slightly, but instead it trimmed the crop by 187 million bu. from last month to 13.763 billion bushels.
  • Early support came from news Mexico bought 252,153 MT of U.S. corn for 2013-14 delivery as it suggests prices are rebuilding demand.
  • USDA also trimmed old-crop carryover more than expected to 719 million bu. and instead of raising 2013-14 carryover, it trimmed it by 122 million bu. to 1.837 billion bushels.
  • USDA also trimmed global 2013-14 corn carryover by 800,000 MT to 150.17 MMT, which is up from 123.11 MMT in 2012-13.
  • Traders are also keeping an eye on the weather, which calls for dry conditions across the Corn Belt well into next week.

 

Soybean futures have extended gains to trade 20- to 30-plus cents higher at midday.

  • Soybean futures have extended early gains in reaction to bullish USDA data.
  • Traders are reacting to news that USDA trimmed the size of the crop more than expected to 3.255 billion bu. by lowering planted/harvested acreage by 500,000 and trimming yield by 1.9 bu. per acre from last month.
  • While USDA left its 2012-13 soybean carryover peg at a very tight 125 million bu., it lowered 2013-14 carryover by 75 million bu. from last month to 220 million bushels.
  • Also supportive this morning is news China purchased 713,000 MT of U.S. soybeans and an unknown destination purchased 140,000 MT of U.S. soybeans for 2013-14. Combined, this is the fifth largest one-day soybean sale on record. This signals value buying is occurring.
  • Traders are also making note of the dry forecast for the last half of August for much of the Corn Belt, although temps are expected to remain moderate.

 

Wheat futures are narrowly mixed at midday.

  • All wheat flavors have posted gains at times following USDA's reports, but these have encouraged some scattered selling.
  • Much of the buying comes on spillover from sharp gains in the bean pit and a price recovery in the corn market in reaction to bullish USDA data.
  • Meanwhile, USDA left its all wheat crop estimate unchanged at 2.114 billion bu., which is a slight disappointment since traders looked for a slight drop in the crop size.
  • But USDA raised its 2013-14 U.S. usage estimates more than expected to trim carryover by 25 million bu. from last month to 551 million bushels.
  • But a reminder of a recovery in the global crop is limiting buying. USDA raised its 2013-14 global wheat carryover projection slightly from last month to 172.99 MMT, which is still down slightly from 174.42 MMT in 2012-13.

 

Live cattle futures are slightly to moderately higher on improvement in the beef market.

  • Live cattle futures started the day stronger in reaction to last week's higher cash cattle trade at $121 in the Southern Plains, which signals a seasonal low is in place.
  • Traders are also encouraged by the solid start to the boxed beef market for the week. Choice values are up $1.04 this morning and Select is up 63 cents. However, only 99 loads have changed hands.
  • USDA raised its 2013 beef production projection slightly from last month, but reminded the market of the tightening 2014 outlook via its S&D update.
  • Strength in the grain markets is weighing on feeder futures this morning.

 

Lean hog futures are slightly to moderately higher, but have moved off earlier highs.

  • Lean hog futures are seeing spillover from live cattle, as well as followthrough technical buying.
  • Upside potential is being limited by weakness in the pork cutout market. Prices are 27 cents weaker this morning, but movement is decent at 153.5 loads.
  • Cash hog bids are mostly steady this morning as packers say supplies are about even with demand. While supplies are climbing seasonally, packer demand remains solid given profitable margins.
  • August hog futures are finding support from the discount it holds to the cash index.
  • October lean hog futures gapped higher on the open and tested resistance at last week's high, but have moved off the session high.
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