Market Snapshot, Noon CT (VIP) -- July 19, 2013

July 19, 2013 07:16 AM
 

Corn futures are 3 cents higher in the front month after moving lower in early trading. New-crop futures are fractionally lower after trimming early loss.

  • Traders are looking at what they view as friendly weather forecasts for this weekend and next week. The cold front due this weekend is expected to bring relief from hot, dry conditions across the Midwest as well as some rain.
  • The 6- to 10-day forecast is also seen as a positive for crop development with a hefty percentage of the crop pollinating under a forecast of mostly normal temps, though some above-normal temps are expected for far western Belt states. The precip outlook is also favorable as it calls for normal precip in the western Midwest and above-normal precip in the eastern part of the region.
  • September futures continue to benefit from bull-spreading due to signs price dips attract demand and carryover supplies remain tight. Basis prices at interior locations have firmed as farmers have been unwilling sellers of old-crop supplies.
  • Gulf basis remained steady for all delivery periods in the late-morning trade.

 

Soybean futures are 17 cents higher in the August contract, while deferred months are mostly 8 to 10 cents stronger.

  • Bull spreading continues this morning on tight old-crop supplies and recent signs of demand improvement.
  • Gulf basis firmed 5 cents for immediate delivery this morning after posting strong gains yesterday. Basis levels held steady at midday. Traders view the firming in basis as a sign more export demand news may be ahead.
  • Concern about the slow-developing bean crop has traders looking to the buy side of new-crop contracts as they worry supplies may not rise as much as previously thought with the harvest of the new crop.
  • Traders will get an update on how much the growing crop deteriorated this week in Monday's crop condition report from USDA.
  • But traders also believe next week's weather will be more favorable for crop development but late-morning shifts to a slightly drier outlook for the western Corn Belt this weekend by some private forecasters has lifted new-crop futures.

 

Chicago and Kansas City wheat futures are mostly 4 to 8 cents higher, while Minneapolis is fractionally to 5 cents higher.

  • Wheat futures have moved higher as spillover pressure from the corn market eased and soybean futures surged.
  • Supporting the rise is USDA's announcement of a 120,000 MT SRW wheat sale to China for 2013-14 delivery.
  • Also, there has been some talk that Brazil is in the market for U.S. HRW wheat due to the shortfall of Argentina's crop.
  • The market also received confirmation China bought 600,000 MT of Aussie wheat. This news is already largely factored into prices as it was rumored earlier in the week.
  • Gulf basis is steady for SRW for all delivery periods with the exception of first-half September which is 5 cents stronger.

 

Live cattle futures are slightly lower in the front two contracts and slightly higher in later contracts. Feeder cattle are slightly higher.

  • Light to moderate cash cattle trade is underway in Kansas, Oklahoma and Texas at $119 -- steady with week-ago prices.
  • Traders are also reducing their risk exposure ahead of the Cattle on Feed Report. They expect a friendly Cattle on Feed Report with all categories showing declines from a year earlier. On feed is expected to come in at 97% of year-ago, Placements at 94.9% and Marketings at 94.7% of year-ago levels.
  • The boxed beef market did provide some positive news this morning with Choice beef listed as 21 cents higher and Select 59 cents higher, but movement is light at 83 loads.
  • Feeder cattle futures are higher on weaker corn prices tightening supply prospects.

 

Lean hog futures continue to trade slightly to moderate lower.

  • Losses in wholesale pork market continue to weigh on hog futures.
  • But the cash hog index still holds a $5-plus premium to the August contract, which is limiting selling interest in that contract. The discount has narrowed recently, however.
  • Traders received more negative news from the pork market today. USDA reports pork cutout values fell 22 cents today on a light movement of 139.3 loads.
  • Traders are also looking ahead to Monday's Cold Storage Report, which is expected to show frozen pork stocks at record-large levels for the end of June.
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