Market Snapshot, Noon CT (VIP) -- July 11, 2013

July 11, 2013 07:11 AM
 

July corn futures are up 18 cents, while new-crop futures are mostly 2 to 3 cents higher.

  • New-crop futures are weaker after today's USDA's Supply & Demand Report showed new-crop carryover climbing more than expected.
  • Traders expected USDA to peg new-crop carryover at 1.874 billion bu., but USDA placed the total at 1.959 billion bu., 10 billion bu. higher than the previous month.
  • July futures are stronger as USDA reduced its old-crop carryover projection by 40 million bu., slightly less than expected.
  • Signs of demand improvement are providing some support. Weekly corn export sales of 392,000 MT for 2012-13 and 657,800 MT for 2013-14 came in well above expectations and the overall tally topped the 1 MMT mark.
  • Plus, USDA announced a daily new-crop corn sale to China today for 120,000 MT.
  • A recent Reuters report says that China's state grain buyer has recently purchased more than 1 MMT of U.S. new-crop corn.
  • Expectations for a return to above-normal temps across the heart of the Corn Belt during pollination is adding light support.

 

Soybean futures are mostly 1 to 2 cents higher thanks to corrective short-covering.

  • Selling pressure initially moved into new-crop futures as USDA's Supply & Demand Report showed new-crop carryover supplies rising more than the trade expected. But some short-covering has since returned to the market.
  • USDA left its old-crop carryover estimate unchanged at 125 million bu., whereas traders had anticipated a 4-million bu. cut. New-crop carryover came in well above expectations at 295 million bushels. This was a 30-million bu. increase from June.
  • Offsetting some of the bearish impact of today's USDA report are signs of value buying. USDA announced an optional origin sale of 120,000 MT of soybeans to unknown destinations for 2013-14 delivery.
  • This morning's Weekly Export Sales Report included a net sales reduction of 70,900 MT for 2012-13 and sales of 410,800 MT for 2013-14.
  • A worrisome forecast for a slow-developing crop is also offsetting the bearish new-crop carryover projection.

 

Wheat futures are 10 to 16 cents stronger in Chicago, 3 to 14 cents higher in Kansas City and 3 to 8 cents higher in Minneapolis.

  • USDA surprised traders by lowering expected carryover supplies to 576 million bu., well below the 624 million bu. anticipated by the trade.
  • That supply reduction in the face of strong export news is lifting futures.
  • But countering this is USDA's all wheat production peg of 2.114 billion bu., which a 34 million bu. increase from last month, whereas the market had been expecting a 23 million bu. cut to production.
  • Much stronger-than-anticipated weekly export sales of nearly 1.5 MMT for 2013-14 are also lifting wheat futures today. China was the lead buyer.
  • This follows recent daily sales announcements to the country that have topped 1.3 MMT.
  • China's state grain buyer says its wheat imports will rise by 73% in 2013-14 to 5 MMT due to late-season weather trimming its crop.

 

Live cattle futures continue to see narrowly mixed trade. Feeder cattle futures have softened to choppy trade.

  • Live cattle futures and feeder cattle futures are seeing choppy trade due to strength in the corn and soybean markets.
  • Choice beef is up 4 cents, at $193.11 while Select beef is down 92 cents this morning. Movement was again solid at 121 loads, which is supportive to futures.
  • The stand off in the cash cattle trade continues with packers bidding $115 to $117 in the South while feeders are asking $121 to $123.
  • Weekly beef export sales rose 2,200 MT from the week prior to 14,600 MT.
  • Futures are also finding some support from the sharp decline in the U.S. dollar index.

 

Lean hog futures are slightly weaker with the exception of the July contract, which is marginally higher.

  • Futures are seeing selling pressure from this morning's 86-cent decline in pork cutout value. Movement is a moderate 180.7 loads.
  • The cash market is seen as steady to slightly weaker on the decline in packer margin.
  • Expectations for corn production to rebound in 2013-14 is limiting selling interest.
  • Weakness in the U.S. dollar index is also supportive to hog futures.
  • The expiring July contract is finding some support from its slight discount to the cash index.
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