Market Snapshot, Noon CT (VIP) -- August 14, 2013

August 14, 2013 07:00 AM
 

Corn futures are 5 to 8 cents higher with September leading gains.

  • Short covering continues to dominate trade today on ideas the downside was overdone yesterday. Support is appearing at yesterday's lows.
  • The September contract is gaining support from the lack of farmer selling, especially in the dry western Corn Belt, which is forcing end-users to scramble for tight old-crop supplies.
  • The trade is starting to take notice of the continuing dryness in the western Corn Belt, even though USDA's crop projection calls for a record harvest. While there are some near-term chances for scattered rains in this region, the 6- to 10-day outlook calls for below-normal precip for this region and a buildup in heat.
  • Light support also comes from news U.S. weekly ethanol production rose 4,000 barrels per day (bpd) to 857,000 bpd over the past week. Weekly ethanol stocks declined 291,000 barrels to 16.43 million barrels.
  • Gulf basis is a penny higher for last-half August delivery which is raising speculation some export business may be cooking.

 

Soybean futures are 5 to 10 cents higher, trimming earlier gains.

  • Prices are looking for direction after the sharp run-up of late. A weaker dollar and firmer corn futures are also providing support.
  • Profit-taking pressure dominated trade early before buying again resurfaced. But resistance at yesterday's highs has trimmed gains.
  • USDA's announcement China purchased 110,000 MT of soybeans for 2013-14 delivery reminds the market that end-users see current prices as a value.
  • Weather is still a factor as forecasts for below-normal precip for the western Corn Belt next week and above-normal temps for the northern Midwest are also providing support as some of the bean crop will be setting and filling pods at that time.
  • Gulf basis is steady through first-half September delivery, 5 cents higher for last-half September delivery, steady for October and December delivery and 3 cents higher for November delivery at midday.

 

SRW and HRW are slightly lower and HRS is marginally higher.

  • Wheat futures are shrugging off the boost in corn futures and weaker dollar and edging lower.
  • Traders cite yesterday's poor technical finish as motivation for selling.
  • Increasing concern U.S. wheat is overpriced versus Black Sea-sourced wheat is adding to the bearish bias.
  • Gulf SRW wheat basis is steady for all delivery periods in late-morning trade after being steady for immediate delivery and down 5 cents for early September delivery earlier this morning.
  • HRS is preparing for harvest pressure to develop with USDA reporting spring wheat harvest was 6% complete as of Sunday.
  • Russia's ag ministry has trimmed the country's grain crop estimate to say it will not exceed 90 MMT, which is down from a range of 90 MMT to 94 MMT. This is still a major rebound from last year's 71 MMT crop.

 

Live cattle futures started firmed but futures have turned slightly lower.

  • Profit-taking has moved into the market following recent gains and the gap-higher open. The gaps have since been filled.
  • In addition, traders are disappointed packers are bidding only $119 at Kansas feedlots. Owners are balking, however. They are looking for bids at last week's $121 or better.
  • Traders continue to look for the normal seasonal rebound in cattle futures to begin soon as supplies tighten and beef demand improves. But the cash market has yet to cooperate.
  • Showlist estimates are sharply lower this week and supplies are expected to tighten going forward.
  • The trade is getting positive news from the boxed beef market today. Choice boxed beef is $1.63 higher and Select is 81 cents firmer. In addition, movement is a positive 136 loads. The gains are coming seasonally on Labor Day and back-to-school demand.
  • Feeder cattle futures are slightly weaker, following the trend in live cattle futures.

 

Lean hog futures are moderately higher through the February contract with October and December lean hogs leading gains. Far deferred months are down slightly.

  • October and December futures gapped higher at the open and continue to hold the gains. The surge lifted futures above the top end of the past six-week trading range.
  • The lift in October futures comes as traders narrow the sharp discount between October futures and the cash hog index. That's due to the August lean hogs contract expiring at noon today.
  • Packers are increasing kill runs due to profitable margins, but traders are leery prices will eventually weaken seasonally on rising supplies.
  • Average hog weights held steady in Iowa and southern Minnesota the week ended Aug. 10 compared to the week prior.
  • The pork cutout value eased 4 cents this morning and movement is a strong 273.9 loads.
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