Market Snapshot, Noon CT (VIP) -- July 26, 2013

July 26, 2013 06:58 AM
 

Corn futures are 1 to 3 cents lower this morning.

  • New-crop futures continue to be pressured by favorable weather, which brought rain to areas of the dry western Corn Belt overnight and into the eastern Belt this morning. Temps are unseasonably cool, as well, and expected to remain that way into next week.
  • With the longer-range weather forecasts calling for normal to below-normal temps and normal to above-normal precip, traders feel the bulk of the corn crop will pollinate under non-stressful conditions.
  • Ideas the downside has been overdone are limiting selling pressure thus far.
  • USDA reported daily sales of 211,328 MT to unknown destinations, with 8,128 MT for 2012-13 and 203,200 MT for 2013-14. Traders are still waiting on Chinese demand to surface as the last drop below $5.00 in December corn futures triggered strong Chinese purchases.
  • Gulf basis is down 70 cents for July delivery, up 10 cents for first-half August delivery, up 5 cents for second-half August delivery, down a penny for September and October delivery, down 3 cents for November delivery and steady for December delivery.

 

August soybeans are 7 cents weaker while new-crop futures are narrowly mixed.

  • August soybean futures are again losing ground, though selling pressure is much less than it was earlier this week. August meal futures are under heavy pressure.
  • New-crop soybeans are feeling light pressure from the continuing improving weather conditions for the late-developing crop.
  • USDA reported a daily sale of 220,000 MT of U.S. beans to China for 2013-14. That's a sign prices have fallen to "value" levels. But there continues to be talk of Chinese cancellations and that China will release state-owned reserves onto the domestic market.
  • Gulf soybean basis is up 10 cents for July delivery, down 20 cents for first-half August delivery, down 35 cents for last-half August delivery, down 5 cents for first-half September delivery, down 2 cents for last-half September delivery and unchanged for October and November delivery.

 

SRW futures are choppy with an upside bias, while HRW and HRS futures are narrowly mixed.

  • Wheat futures are facing spillover pressure from corn, though light corrective buying is keeping price action choppy.
  • There is more news of global demand improving for wheat, but much of the business is going to countries other than the U.S. due to lower prices. The Black Sea region is getting much of the recent business.
  • After sampling fields in North Dakota, far northern South Dakota and far western Minnesota the past three days, scouts on the Wheat Quality Council HRS tour calculated a hard red spring wheat yield of 44.9 bu. per acre, which was exactly the same as they found last year, but greater than the five-year tour average of 43.3 bu. per acre. Tour participants say while yield potential is the same as year-ago, this year's crop still has a ways to go before harvest because of the delayed start.
  • Gulf SRW basis is steady in late-morning trading.

 

Live cattle and feeder cattle futures are higher. Feeder cattle are also firmer.

  • Live cattle futures are maintaining slight gains made since the gap-higher opening. The upswing follows the rebound yesterday which saw prices penetrate the lower end of the recent sideways trading range and then surged back above support levels.
  • Cash prices continue to trend sideways which has traders looking for a seasonal low in both the cash and wholesale beef markets.
  • The wholesale beef market is not supporting that view this morning as Choice boxed beef prices fell 65 cents after rising for two days in a row. Select beef, however, is 18 cents higher. Movement is a poor 78 loads.
  • Feeder cattle futures are following the lead of live cattle futures. A mildly weaker tone in corn is also supportive for feeders.

 

Lean hog futures are moderately lower heading into afternoon trade.

  • Steady to weaker cash hogs and lower wholesale pork prices are pressuring lean hog futures.
  • In addition, traders are taking profits on ideas corrective gains earlier this week were overdone.
  • The pork cutout value fell $1.79 this morning, deepening already negative packer margins.
  • Traders look for the cash market to soften seasonally moving forward, which lowers the need to reduce the discount futures hold to the cash market.
  • August futures are probing the gap left Tuesday after the surprising Cold Storage Report. October futures filled the gap and then some this morning.
     
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