Market Snapshot, Noon CT (VIP) -- August 7, 2013

August 7, 2013 07:03 AM
 

Corn futures are 1 to 2 cents higher.

  • Futures are working higher on light corrective buying, but bearish attitudes are limiting the upside to short-covering.
  • Limited near-term demand has softened basis and is limiting buying interest in the lead-month September contract.
  • Both old- and new-crop futures are heavily oversold, but corrective bounces remain very weak reflecting the heavily bearish attitude dominating the market.
  • Forecasts call for cooler temperatures this week. Longer-range forecasts call for normal to below-normal temps and normal to above-normal precip across the Corn Belt through at least mid-month, which traders view as beneficial for crop development and positive for extremely late pollination in some areas.
  • Gulf basis levels are unchanged for near-term delivery in late-morning trade and 1 cent higher for October delivery, 2 cents stronger for November delivery and 1 cent higher for December delivery.

 

August and September soybean futures are around 7 to 11 cents higher. New-crop contracts opened the day session firmer, turned mostly lower but have moved back to 3- to 5-cent gains in late-morning trading.

  • Gains in futures are mainly corrective in nature as traders view losses as overdone.
  • Tight supplies continue to support old-crop soybean futures.
  • Weather remains the major negative as traders view forecasts calling for normal to below-normal temps and normal to above-normal precip as beneficial for crop development. That limits the upside to mild short-covering.
  • Futures are receiving mild support from news USDA announced a daily soybean sale of 220,000 MT to China for 2013-14. That follows a 110,000-MT new-crop sale to China yesterday. The pickup in Chinese demand signals prices have dropped to a "value" level.
  • Gulf soybean basis is unchanged in late-morning trading.

 

SRW, HRW and HRS wheat futures are roughly 3 to 6 cents lower.

  • Wheat futures are down on demand concerns. While export demand has improved in recent weeks, but the U.S. has missed out on some key purchases as U.S. prices are higher than the competition. Global supplies remain ample, suggesting U.S. prices will continue to be viewed as overpriced relative to world prices.
  • Traders are watching to see whether or not SRW and HRS futures can close above the old contract lows, which were spiked this morning. If that support falters on a closing basis, it could trigger a wave of fresh chart-based selling.
  • Traders continue to ignore weakness in the U.S. dollar index.
  • Gulf basis is 10 cents lower for last-half August delivery, 5 cents lower for first-half September, 2 cents lower for last-half September and unchanged for October and later delivery.

 

Live cattle futures are mixed while feeder cattle futures are down 95 cents to $1.70.

  • Traders continue to look for cash prices to rise compared to the $120 prices seen in the Plains last Friday. That expectation is supporting live cattle futures slightly.
  • Traders continue to look for a low in the boxed beef market and got some indication of that today as Choice beef rose $1.49 and Select increased 59 cents. Movement is a positive 147 loads.
  • Also supportive is news beef exports in June were the largest of the year in terms of volume and value, with Japan the lead buyer.
  • Feeder cattle futures are down on profit-taking as traders view the recent runup as overdone.

 

Lean hog futures have turned lower after mixed trade earlier this morning.

  • August lean hog futures are mildly weaker, with selling interest limited by the steady to firmer tone in the cash hog market.
  • Cash hog bids are steady to $1 higher as packers work to fill in late-week needs.
  • Profit-taking is underway in fall- and winter-month contracts. For now, traders have shifted their attention away from the big discount these contracts still hold to the cash market.
  • The pork cutout value weakened 43 cents this morning but movement is a very strong 330.5 loads.
  • Pork exports in June of 169,098 MT were up 2.4% from the previous month and were the highest tally of the year.
     
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