Market Snapshot, Noon CT (VIP) -- June 12, 2013

June 12, 2013 07:16 AM
 

Corn futures extended losses on the release of USDA's data to post double-digit losses in all but the nearby contracts which are 5 to 9 cents lower.

  • Traders are reacting to USDA's higher-than-expected new-crop corn carryover projection of 1.949 billion bushels. While down 55 million bu. from last month, traders expected a steeper drop.
  • USDA trimmed its 2013-crop yield projection by 1.5 bu. per acre to 156.5 bushels, but left its planted and harvested acreage pegs unchanged. USDA also trimmed total 2013-14 corn use by 70 million bu. from last month.
  • USDA raised its old-crop corn projection by 10 million bu. from last month to 769 million bushels, which is also a disappointment.
  • Traders are putting planting delays on the backburner and will now have to wait for USDA's June 28 Acreage Report for an update on acreage.
  • December corn futures have penetrated support last week's low and have filled the May 24-28 gap.

 

Soybean futures remain mixed, with old-crop 7 to 13 cents higher and new-crop futures down mostly 14 to 17 cents.

  • New-crop soybean futures posted initial sharp losses in reaction to USDA's reports but have moved off session lows.
  • USDA left both its old-crop and new-crop carryover estimates unchanged from last month at 125 million bu. and 265 million bu., respectively.
  • Traders were looking for a slight increase in new-crop carryover from last month and quickly discounted the unchanged projection given expectations some corn acres have been switched to soybeans.
  • While some in the trade maintain a "rain makes grain" attitude, rains moving across the Corn Belt again this morning are raising concerns about ongoing soybean planting delays and whether producers will have time to plant intended soybean acres -- as well as make acreage switches (from corn to soybeans).
  • November soybean futures posted a new daily low of $12.99 but found buyers at the $13.00 level and are now trading near the middle of today's range.

 

Chicago and Kansas City wheat futures are posting double-digit losses on spillover from corn, with Minneapolis futures down 4 to 6 cents.

  • Wheat traders reacted negatively to this morning's USDA data. The market is also seeing spillover from the corn market.
  • USDA raised the all winter wheat crop by 23 million bu. from last month at a time when traders looked for a slight downward revision. USDA now pegs all winter wheat at 1.509 billion bushels.
  • Also this morning, USDA raised old-crop wheat carryover by 15 million bu. from last month to return it back above the level seen in 2011-12.
  • USDA lowered 2013-14 wheat carryover by 11 million bu. from last month to 659 million bu., although it still came in higher than expected.
  • ABARES has raised its forecast for the 2013-14 Australia wheat crop by 499 MT to 25.399 MMT, which, if realized, would be up 15% from last season.
  • July Chicago wheat futures violated support to post a fresh weekly low but have moved off the daily low.

 

Live cattle futures are favoring a weaker tone in mixed trade at midday.

  • Live cattle futures are slightly lower in all but the October contract which is firmer.
  • Nearby futures remain at a $2-plus discount to last week's trade at $122 in the Southern Plains and mostly $123 to $124 cash action in Nebraska, which is limiting selling interest.
  • But uncertainty surrounding this week's cash prospects are limiting buying. This week's showlist is up from last week, giving feedlots less bargaining power.
  • Choice boxed beef values have softened by 79 cents this morning, but Select is up 59 cents. Movement is decent at 155 loads.
  • This morning USDA trimmed its 2013 beef export projection slightly from last month but left its 2014 projection unchanged. Once again, USDA lowered its average cash steer price for 2013 by a dollar on each end to a range of $125 to $130.

 

Lean hog futures are slightly to moderately higher at midday.

  • August lean hog futures have extended early gains and are the daily price leader. The contract is challenging resistance at this week's high to maintain the bullish near-term chart outlook.
  • Cash hog bids are again steady to higher today as packers are in need of supplies and market-ready hogs are not readily available.
  • But some packers have scaled back kill hours as they have been cutting in the red for an extended period.
  • The pork cutout value surged $2.53 this morning on strong movement of 235.7 loads.
  • The fact that futures are technically oversold does raise a cautionary flag, however.
  • USDA left its 2013 and 2014 pork export projections unchanged from last month. USDA raised its 2013 average cash hog price by $1 on both ends to $59 to $61.
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