Market Snapshot, Noon CT (VIP) -- August 9, 2013

August 9, 2013 06:56 AM
 

Corn futures are 2 to 7 cents lower.

  • Corn futures have extended losses as soybeans have turned lower.
  • Traders continue to focus on near-term weather forecasts as favorable for crop development and extended forecasts calling for above-normal precipitation in the dry western Corn Belt.
  • Traders are looking ahead to USDA's first survey-based crop production estimate of the season on Monday. USDA is expected to peg the 2013 corn crop at 14.005 billion bu., up 55 million bu. from last month's projection.
  • Traders also anticipate a slight downside revision to old-crop carryover to 724 million bushels.
  • A stronger dollar is adding to the negative tone.
  • Gulf basis is unchanged in late-morning trading, with the exception of September delivery which is 1 cent lower.

 

Soybean futures have reversed course from their higher opening and are 5 to 6 cents lower for August and September futures and narrowly mixed for deferred contracts.

  • Futures opened higher on signs of improved demand for soybeans following the price break. But prospects of continuing favorable weather with the possibility of increased precipitation in the dry western Belt has turned trader attitudes negative.
  • Some light profit-taking following Thursday's gains are adding pressure. A stronger U.S. dollar index is also contributing to negative attitudes.
  • Traders are positioning ahead of USDA's Crop Production Report Monday. Pre-report expectations are for USDA to peg the crop at 3.336 billion bu. on a national average yield of 43.6 bu. per acre. Last month, USDA projected the bean crop at 3.42 billion bu. and the yield at a record 44.5 bu. per acre.
  • Traders expect USDA to trip its old-crop carryover estimate to 123 million bu. Monday.
  • Traders reacted initially to positive economic data out of China overnight. China's consumer price index (CPI) stabilized at 2.7% above year-ago in July and factory output rose 9.2% from year-ago. But that news has been discounted and traders are again looking at favorable growing conditions for the U.S. crop.
  • Gulf basis is unchanged in late-morning trading with the exception of a 2-cent rise for October delivery and a 1-cent gain for November delivery. Basis surged 10 cents for immediate delivery and 5 cents for early September delivery early this morning, which had traders thinking more demand news may be ahead.

 

SRW futures are down 5 to 7 cents, HRW contracts are down 2 to 4 cents while HRS wheat is fractionally mixed.

  • Winter wheat futures have extended early losses on the downshift in corn futures and turnaround in soybean futures.
  • Traders are looking ahead to USDA's Monday report, which is expected to reflect an all wheat crop around 2.106 billion bu., which would be down slightly from last month.
  • Traders continue to worry U.S. wheat is viewed as premium priced on the global market and will miss out on export opportunities. Adding to their concerns is news out of Romania the country harvested its largest wheat crop since 2005 and its second largest crop in more than 40 years. This means rising exportable supplies from a low-priced marketer.
  • SRW Gulf basis is a penny lower for August delivery and unchanged for other delivery periods in late-morning activity.

 

Live cattle futures are fractionally mixed while feeder cattle futures are slightly lower.

  • Live cattle futures continue to digest news that Tyson Food has notified its suppliers it will no longer accept cattle fed with Zilmax beginning Sept. 6. This heightened concerns about tight beef supplies.
  • However, news Cargill does not plan to follow suit has tempered the bullish reaction to the Tyson news. Light profit-taking is occurring as a result.
  • The trade continues to wait for cash cattle prices to firm, but the standoff between packers and feedlots continues. Meanwhile, nearby futures stand at a $2.50 or more premium to last week's cash cattle trade, which was mostly around $120 in the Southern Plains.
  • Boxed beef trade is providing a limited lift this morning as Choice beef is 18 cents higher but Select beef is a dime lower. Movement is a moderate 109 loads.
  • Feeder cattle are weaker on light profit-taking.

 

Lean hog futures are slightly to moderately lower.

  • The pork cutout value slipped another 14 cents this morning following its $1-plus slide yesterday. That has traders looking toward the start of the seasonal decline in wholesale pork prices.
  • The cash hog market is trading steady, however, which is giving the market some support.
  • However, trader attitudes are bearish as they look for a seasonal decline in cash prices and have priced in a near-$17 discount to the cash in the October contract.
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