Market Snapshot, Noon CT (VIP) -- July 24, 2013

July 24, 2013 07:14 AM
 

Corn futures have moved to the negative side after choppy trade early this morning. The September contract is down 9 cents and near the lows of the day, while new-crop contracts are 1 to 2 cents lower.

  • The September contract continues to see spillover selling pressure from the collapse in August soybean futures.
  • Weather forecasts that are viewed as non-threatening to pollination continue to pressure futures.
  • Those forecasts call for mild temperatures across the Midwest with the upper Midwest due to see an inch or two of rain in the next five days.
  • Traders are looking to see if the slump by December futures under $5.00 again attracts buying interest as has been the case in the past. They will be hesitant to press futures lower if the decline again attracts buying.
  • Weekly ethanol production fell 23,000 barrels per day (bpd) to 853,000 bpd over the past week. Ethanol stocks rose 700,000 barrels from the week prior to 17.3 million barrels.
  • Gulf basis weakened 5 cents for last-half August delivery and firmed 3 cents for September delivery at midday. Other delivery periods are steady.

 

Soybean futures are lower with the August contract down its 52 cents after trading limit lower. September is down 15 cents and new-crop contracts are slightly lower.

  • Aggressive bull spread unwinding and a sharp drop in interior basis levels drove August futures limit lower in early trading.
  • Adding to the selling pressure was the triggering of sell stops as prices drove lower.
  • Weather forecasts are seen as favorable for new-crop growth. That view is limiting new-crop buying to short covering.
  • Rumors China may release 3 MMT of government soybean reserves onto the domestic market, which triggered yesterday's selloff, continue to circulate, but there is still no confirmation.
  • Gulf soybean basis has also plunged 65 cents for immediate delivery and 10 to 20 cents for August delivery early this morning. At midday, basis rose 3 cents for last-half September delivery and held steady for other delivery periods. The collapse in basis suggests buyers are comfortable waiting for new-crop supplies.

 

Chicago and Minneapolis wheat futures are mostly 1 to 4 cents higher with Kansas City wheat bull spread from 2 cents higher to 2 cents lower.

  • Short covering continues dominate trade.
  • Futures have also gotten a little lift as August soybean futures have traded off their limit losses.
  • The export market continues to see business going to cheaper producers. Egypt, the world's biggest importer of wheat, bought 240,000 MT of Russian, Romanian and Ukrainian wheat for shipment Sept. 1-10 at prices considerably lower than those in the U.S.
  • Algeria bought at least 400,000 MT of optional origin wheat overnight, but that business is likely to be filled with French wheat. Iraq has tendered to buy optional origin wheat.
  • Reports from the Wheat Quality Council HRS tour indicate scouts found better-than-average yield potential in spring wheat fields in southern North Dakota and northern South Dakota on Tuesday.
  • Gulf basis levels are steady in late-morning trading.

 

Live cattle futures are slightly higher at midday. Feeder cattle futures are choppy with front contracts slightly higher.

  • Live cattle are responding to steady cash prices and a small rebound in the wholesale beef trade.
  • Choice boxed beef cuts rose 27 cents this morning to $186.61 and Select gained 85 cents to $182.35. Movement was a solid 126 loads.
  • Around 10,000 head have changed hands in Kansas at $119 this morning, steady with week ago. Texas is also reporting cash bids at $119 this morning, which is steady with week-ago. The steady bids reflect the smaller showlists available this week.
  • Nearby feeder cattle futures are slightly higher on the small gains in live cattle futures and decline in grain futures.

 

Lean hog futures are mixed with August slightly lower and October marginally higher.

  • Futures started off weaker on profit-taking after yesterday's strong gains and on weakness in the pork market.
  • The pork cutout value fell $2.50 today but movement was strong at 235.6 loads.
  • Cash hog bids are mostly steady today as supplies remain tight. Traders look for runs to increase seasonally.
  • The August contract shows a very narrow trading range with support sitting at yesterday's low of $98.25, which is the top of the gap left at yesterday's open.
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