Market Snapshot, Noon CT (VIP) -- August 13, 2013

August 13, 2013 07:06 AM
 

Corn futures have moved 3 to 7 cents lower after a choppy start.

  • Corn traders shifted to the negative side after an early attempt to push futures above Monday's high failed.
  • Strength in the U.S. dollar index is also adding to today's negative tone.
  • Realization USDA's corn crop estimate, if achieved, would still be the largest corn crop on record has traders tempering their bullish reaction to yesterday's report.
  • But a drawdown in USDA's old-crop carryover estimate due to prices dropping low enough to spur some exporter interest is keeping selling interest in check.
  • Traders have a mixed view on current weather conditions. The cool temps have limited damage to the corn crop during pollination, but development has been slowed. This will put a premium on favorable fall weather. As of Sunday, 32% of the crop was in the dough stage and 5% of the crop was dented, compared to the five-year average paces of 48% and 17%, respectively.
  • Some traders are citing concerns about problems in the dry western Corn Belt. The National Weather Service Forecast for Aug. 18-22 sees below-normal precipitation and above-normal temperatures ahead for the period.
  • Gulf corn basis is 3 cents firmer for September delivery and 1 cent firmer for October delivery.

 

Soybean futures are 1 to 6 cents higher at midday after a choppy start.

  • Traders continue to process USDA's lower-than-expected soybean crop estimate of 3.255 billion bushels, which, if harvested, would still be a major rebound in production.
  • Strength in the U.S. dollar index is offering some negative pressure.
  • However, the technical patterns are much improved and funds continue to be long.
  • Some support is coming from yesterday's large daily sales announcements that totaled 853,000 MT, as this signals value buying is underway among exporters.
  • But traders are focusing more attention on growing conditions and current weather forecasts that are basically dry. The NWS 6- to 10-day outlook calls for above normal temps in the northern and western Midwest, while below-normal precip is expected for much of the central and western Corn Belt.
  • Futures are benefiting slightly from the slight decline our weighted Crop Condition Index.
  • Gulf soybean basis is somewhat negative as basis is 4 cents weaker for first-half September delivery and 5 cents lower for last-half September delivery.

 

SRW wheat is down 3 to 6 cents and HRW is mostly 1 to 3 cents lower. HRS wheat remains mixed.

  • The downturn in corn futures has pressed wheat futures lower as well.
  • In addition, futures are seeing pressure from today's stronger U.S. dollar index.
  • Much of yesterday's Supply & Demand and Crop Production data for wheat from USDA yesterday is getting a neutral read, but the trade continues to worry U.S. wheat is not competitively priced on the global market.
  • FranceAgriMer increased its estimate of its wheat crop slightly to 36 MMT, which is up from 35.6 MMT last season.
  • UkrAgroConsult raised its grain crop forecast by 1.9 MMT to 53.83 MMT, with wheat production expected at 20.69 MMT.
  • While the condition of the spring wheat crop declined slightly last week, harvest has begun with 6% now cut. Traders expect harvest-related hedge pressure to build soon.
  • Gulf SRW basis is unchanged in late-morning trade.

 

Live cattle futures are slightly higher while feeder cattle futures are narrowly mixed.

  • Futures are gaining some light support on rising confidence by traders cash prices have put in a near-term low. Seasonal trends normally see cash and boxed beef prices moving higher into early fall.
  • The boxed beef market is providing conflicting news. Choice boxed beef values rose 23 cents and Select firmed 66 cents but movement has dropped off sharply to only 66 loads after a positive day yesterday.
  • Showlist estimates are tighter at all locations this week and feedlot operators are asking mostly $124.00 in the Southern Plains and $3 over August futures in Nebraska.
  • There is light support from news JBS and National Beef Packing Co. will continue to buy cattle finished with Zilmax and other beta-agonists. Tyson Foods shook the market last week with its announcement it will stop buying cattle finished with Zilmax Sept. 6.
  • The move above the long sideways trend is also providing some light support on a technical basis.
  • Feeder cattle futures are mixed as traders weigh softer corn prices against profit-taking.

 

Lean hog futures continue to post small gains in nearby contracts and slight decreases in later deferred months.

  • Firm cash bids and the rise in wholesale pork prices recently is lifting nearby contracts. The October contract holds a steep a discount to the cash hog index, which is providing light support.
  • Later deferred contracts are seeing pressure on expectations for rising supplies prompted by the decline in feed prices.
  • Strength in the U.S. dollar index is also seen as a negative.
  • Hogs are gaining light support from today's pork cutout value, which is up 29 cents. Movement is a moderate 158.7 loads.
  • However, traders continue to look for cash prices to decline seasonally this fall once the Labor Day buying concludes.
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