Market Snapshot, Noon CT (VIP) -- July 18, 2013

July 18, 2013 07:09 AM
 

Corn futures are generally 3 to 6 cents lower in late-morning trade.

  • Traders are looking past the current oppressive heat in the Corn Belt to forecasts calling for cooler temperatures and increased chances of rain this weekend and into next week.
  • Technical traders are watching December corn futures. They gapped below $5.00 during the overnight session but have failed to trigger sell stops in the day session. Action so far has failed to test the small gap left in overnight trading.
  • Weather forecasts are muting trader reaction to the positive weekly export sales report. Sales of 152,900 MT for 2012-13 and 1,590,800 MT for 2013-14 topped expectations by a wide margin. Today's tally and last week's 1-MMT-plus figure show that active bargain buying is occurring among exporters, especially China.
  • Gulf basis is steady for summer delivery, down 3 cents for September delivery and up 1 cent for October and November delivery.

 

Soybean futures are posting losses ranging from 12 to 20 cents.

  • Forecasts for milder temps and precip in the Corn Belt this weekend forward are weighing on the bean market.
  • Early pressure has triggered sell stops. The November contract's ability to respect key support around $12.50 will be telling. Currently, prices are still 13 cents above this level.
  • The market is ignoring solid weekly export sales of 110,600 MT for 2012-13 and 591,700 MT for 2013-14. The overall tally narrowly topped expectations and more than doubled the prior week's tally.
  • Gulf basis strength this morning could be indicative of more export demand news ahead. Basis firmed 5 cents for July delivery, 10 cents for early August delivery and 9 cents for early September delivery. Basis is steady in late-morning trade.

 

Wheat futures are 7 to 10 cents lower in Chicago, 2 to 7 cents lower at Kansas City and mostly 2 to 4 cents lower in Minneapolis.

  • Wheat futures are struggling to find buyers due to spillover from corn and soybeans.
  • News Egypt bought 300,000 MT of Romanian, Ukrainian and Russian wheat for shipment Aug. 21-31 is price-negative as it reminds traders Black Sea region wheat is priced below U.S. supplies.
  • Iraq's state grain board has delayed its decision in an international tender to purchase at least 50,000 MT of wheat which closed this week. Initial offers were lowest from Russian and Romania.
  • Today's weekly export sales of 996,600 MT, while a strong number, fell just short of expectations.
  • Light pressure stems from news Strategie Grains raised its 2013-14 EU wheat forecast by 1.9 MMT from last month to 133.4 MMT. EU wheat production is now seen up 6% from 2012-13.
  • A Japanese delegation reportedly told USDA officials yesterday it needs reassurance via more testing that U.S. western white wheat is free of GMO material. Still, trade sources expect exports to resume sometime in August.
  • Gulf basis is mixed with first-half August delivery off 2 cents and first-half September down 3 cents while other delivery periods are unchanged.

 

Live cattle futures continue to trade moderately to sharply higher. Feeder cattle futures are moderately higher as well.

  • Talk of tightening supplies and hopes for rising consumer demand this fall has traders on the buy side today.
  • Cash trade remains very limited but reports of some sales occurring at $117 in Kansas have surfaced. No trade has been reported for Texas as yet. Generally feedlots are asking $121 while packers are bidding $119.
  • The boxed beef market is giving some support to bulls this morning. Choice beef is 47 cents higher at $189.91 and Select is up 36 cents at $184.14. However, movement is a slim 78 loads.
  • Weekly beef export sales rose from the week prior to 15,200 MT, representing solid demand. Weekly beef exports of 15,800 MT were up 21% from the week prior.
  • Traders are also positioning for Friday's Cattle on Feed Report. Traders look for a decline in On-Feed numbers of 3% with a decline of 5% in Placements in June.
  • Weakness in corn futures and the stronger live cattle futures are lifting feeder cattle futures.

 

Lean hog futures are mixed , with the front-month August moderately higher and deferreds slightly favoring the downside.

  • August lean hog futures are being supported as traders work to narrow the discount the contract holds to the cash hog index.
  • The pork market continues to disappoint traders looking for a low. The pork cutout slipped 82 cents this morning and movement is a shy 183.9 loads.
  • Packers are paying steady to lower prices for cash hogs today as they try to trim negative cutting margins.
  • Traders are also beginning to look ahead to Monday's Cold Storage Report, which is expected to show frozen pork stocks as of June 30 at 626 million lbs., which would be down 5.4% from the month prior but up 5.5% from year-ago and 19.9% above the five-year average. This would be a record-high for the end of June.
     
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