Market Snapshot, Noon CT (VIP) -- August 29, 2013

August 29, 2013 07:09 AM
 

Corn futures are a penny lower in the September contract and 1 to 3 cents higher in new-crop futures.

  • Traders tested support in the gap area left on Monday early today, but the market has since firmed.
  • At times today, traders have looked past current weather conditions as they viewed the gains in the U.S. dollar index as reason to take profits this morning as well as square positions ahead of month's end and the Labor Holiday weekend.
  • Weather is still on trader's minds, however, with intense heat in the Corn Belt stressing the crop and no rain in the forecast for the driest areas.
  • In addition, this is this morning's drought monitor shows drought is in effect for much of the upper and western Midwest with 100% of Iowa now covered in some form of drought.
  • This morning's Weekly Export Sales Report showed net sales reductions of 15,000 MT for 2012-13, but sales of 673,800 MT for 2013-14. The solid total signals prices have brought exporters back to the table.
  • Gulf basis has eased 3 cents for September delivery after rising a penny in early trading; basis is unchanged for October and later delivery periods.

 

Soybean futures are 16 cents higher for the September contract and 2 to 6 cents higher for the November through March contracts.

  • Weather is the main driving factor in soybeans as the delayed crop is in a critical growing condition and weather forecasts promise little relief.
  • Meanwhile, today's drought monitor adds to the dire condition for soybeans as it shows drought expanding across the Midwest.
  • Traders are finding support from this morning's Weekly Export Sales Report which shows net soybean sales reductions of 3,200 MT for 2012-13, but sales of 868,700 MT for 2013-14.
  • Limiting gains today is strength in the U.S. dollar index.
  • Gulf basis is weaker in late-morning trade with basis down 5 cents for first-half September delivery, down 3 cents for last-half September, unchanged for October delivery, a penny lower for November and unchanged for December delivery.

 

Wheat futures are 3 to 6 cents lower in most contracts at all three locations.

  • Weakness in corn futures, strength in the U.S. dollar index and yesterday's poor finish is encouraging selling today.
  • Traders are ignoring this morning's weekly export sales of 551,300 MT for 2013-14, which met expectations and was improved from the week prior.
  • Instead traders are focused on the gains in the U.S. dollar index prompted by the better-than-expected second quarter GDP growth. That strength increases traders' worries U.S. wheat prices will remain uncompetitive on the global stage even longer.
  • SovEcon raised its forecast for the Russian wheat crop to 51.7 MMT, but the firm left is exportable surplus forecast at 14.5 MMT.
  • Gulf SRW basis is unchanged in late-morning trading.

 

Live and feeder cattle futures have improved slightly to favor the upside in narrowly mixed trade.

  • Traders continue to wait for cash trade to start in the Southern Plains, but reports packers raised their bids in the South by a $1 has some thinking trade may soon get underway. The Southern Plains saw trade at mostly $123 last week.
  • Packers are preparing for a holiday-shortened week, and trade is expected to be relatively light. But the intense heat is limiting cattle gains amid increasing concerns of a tightening in supplies next week.
  • The wholesale beef market is proving disappointing with Choice beef down 40 cents today and Select off 98 cents. Slow movement of 76 loads is not surprising with the holiday weekend just ahead.
  • The weekly beef export sales surged to 23,200 MT for 2013 and 300 MT for 2014 the week ended Aug. 22. This compares to sales of 16,100 MT the week prior.
  • Weakness in corn futures is providing light support to feeder cattle futures.

 

Lean hog futures are seeing moderate gains.

  • Futures are higher on light short-covering ahead of the long holiday weekend.
  • Supplies are rising and cash prices are $1 to $2 lower today, which is limiting gains. But futures have already priced in a drop in cash prices with October futures at an $8 discount to the cash index.
  • The pork cutout value is providing some support as it is up 38 cents today with movement a moderate 181.3 loads.
  • Weekly pork export sales rose 5,500 MT from the week prior to 12,600 MT for the week ended Aug. 22.
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