Market Snapshot, Noon CT (VIP) -- July 25, 2013

July 25, 2013 07:06 AM
 

September corn futures are down 9 cents, while deferred contracts are fractionally to 2 cents lower.

  • Heavy losses in soybean futures continue to press corn futures lower, especially the September contract.
  • Traders are moving to the negative side of new-crop futures on disappointment the dive under $5.00 by the December contract has not (yet) attracted buying interest from China and other users. South Korean feed makers have upped their corn buys this week, but this business has largely gone to other countries with cheaper supplies.
  • Weekly corn export sales add to the negative tone. USDA reported net sales reductions of 27,900 MT for 2012-13 and sales of 515,900 MT for 2013-14. The combined tally fell short of expectations and week-ago.
  • New-crop futures continue to be pressured by weather forecasts that call for cool temperatures and precipitation to move across the Midwest into next week. The forecast is seen as favorable for pollination.
  • Technical selling is present in the market with September futures testing support at the $5.00 area and December futures possibly headed for the November 2010 low of $4.60.
  • Gulf corn basis held steady in late-morning trade with the exception of the September and December delivery periods which are 2 cents lower.

 

Soybean futures remain under heavy pressure but prices are off their lows in light spread unwinding. Futures are 24 to 30 cents lower.

  • Heavy liquidation of August contracts continues. Sell stops were triggered in the early going but a lack of followthrough has prompted some light short covering; the August contract is off its lows.
  • Farmer selling and weaker basis have pushed cash prices lower. In late-morning trade, Gulf basis is down 10 cents for July delivery through last half August delivery and down 5 cents for first-half September delivery. Basis is steady for farther deferred delivery periods.
  • Traders are increasing selling pressure on new-crop contracts as the forecast for favorable Corn Belt weather through the weekend and over the 6- to 10-day outlook reduces concerns about crop development.
  • The market is ignoring stronger-than-expected weekly soybean export sales of 128,300 MT for 2012-13 and 665,200 MT for 2013-14, with China as the lead buyer.

 

Wheat futures remain under light pressure with SRW down 3 to 4 cents and HRW and HRS down 4 to 6 cents.

  • Heavy spillover pressure from corn and soybeans continues to weigh on the wheat market today.
  • Pressuring prices were Day 2 results from the Wheat Quality Council FRS tour showed an average yield on hard red spring wheat samples in northwest and north-central North Dakota of 45.1 bu. per acre compared with 45.5 bu. per acre last year and a five-year average of 42.6 bu. per acre from similar areas.
  • Also adding to the negative tone is the five-day forecast which calls for some beneficial rains for the Plains.
  • The better-than-expected weekly export wheat sales of 661,400 MT supported prices in the early going.
  • Gulf basis is steady for SRW in late-morning trade.

 

Live cattle and feeder cattle futures are slightly to moderately weaker.

  • The cash cattle market has seen increased activity at $119 in Texas, which is steady with the week prior. Around 10,000 head changed hands at that price in Kansas yesterday, as well. Futures are at a $2 or more premium to these prices, opening the door for some profit-taking.
  • The trade is ignoring the higher wholesale beef trade. Choice beef is $1.03 higher at $187.92 and Select is 63 cents higher at $182.85. Movement is a moderate 101 loads. This paired with yesterday's gains may signal the beef market is working on seasonal low.
  • Weekly beef export sales of 14,900 MT were down slightly from week-ago, but the tally was still relatively strong.

 

Lean hog futures are slightly to moderately lower after a mixed start.

  • After a gap higher opening, nearby contracts have slumped and are trading near their lows of the day. However, a higher high has been posted and prices are trading above yesterday's low. The slump has moved the front-month contract to a $1-plus discount to the cash index.
  • The cash market is mostly steady today. However, packer cutting margins are negative, which is limiting their willingness to bid prices higher.
  • After plunging Wednesday, the pork cutout value is $1.85 higher this morning with movement a moderate 187 loads.
  • Weekly pork export sales improved from week-ago, but sales were still fairly light at 6,800 MT.
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