Market Snapshot, Noon CT (VIP) -- June 27, 2013

June 27, 2013 07:08 AM
 

The front-month contract continues to chop around unchanged, while old-crop futures are mostly 5 to 6 cents lower.

  • Light bull spreading and risk reduction remain the themes in the corn market today.
  • The market is unwilling to be caught long in the event of a bearish surprise from USDA's acreage or grains stocks updates Friday. Strength in the U.S. dollar index is adding pressure.
  • But selling interest is also being limited by some signs of modest demand improvement. Weekly export sales of 336,700 MT for 2012-13 and 153,600 MT for 2013-14 came in near the upper end of expectations and improved notably from the week prior.
  • A drier near-term forecast for saturated areas of the Corn Belt is also weighing on corn.
  • Selling interest is being limited by news Argentina's government has raised the amount of corn it authorizes for export by 1 MMT from last year to 16 MMT for 2013-14 to encourage producers to expand acreage in the coming season.

 

Old-crop soybean futures have pared early gains to trade 3 to 8 cents higher; September beans are steady and new-crop futures are 2 to 3 cents lower.

  • Soybeans are seeing bull spreading ahead of USDA's key reports Friday, which are expected to be friendly for old-crop contracts and bearish for new-crop.
  • The grain stocks report is expected to reflect tight supplies with June 1 stocks expected to come in at 441 million bu., down 226 million bu. from June 2012.
  • New-crop futures, meanwhile, are being pressured by expectations for USDA to raise its soybean acreage estimate 898,000 from March intentions to 78.024 million acres.
  • Old-crop is also benefiting from signs that soy demand remains solid. Weekly export sales of 14,500 MT for 2012-13 and 451,100 MT for 2013-14 topped expectations.
  • USDA also announced a 172,500-MT new-crop soybean sale to unknown destinations.

 

Chicago wheat futures continue to see losses around a penny, while Kansas City is fractionally higher and Minneapolis is up 2 to 6 cents.

  • Wheat futures have not strayed far from unchanged as traders ready for USDA's reports.
  • The market expects USDA to cut its all wheat acreage projection by nearly 700,000 acres, largely due to expectations for a nearly 600,000-acre decline for spring wheat.
  • Harvest results in Kansas have been disappointing, but related hedge pressure will remain a limiting factor until half the crop is in the bag. The market will receive another update on progress Monday.
  • The lagging development and planting of the spring wheat crop continues to support Minneapolis wheat.
  • Although no official announcement has been made, the Argentine government has told exporters it will not authorize more shipments of wheat/flour for 2012-13 due to soaring domestic bread prices. This could boost demand for U.S. wheat.
  • This morning's weekly export sales of 731,800 MT for 2013-14 topped expectations.

 

Live and feeder cattle futures remain firmer at midday.

  • Technical buying continues to propel live cattle futures with some watching for proof the market has put in a low. August live cattle gapped above the 100-day Moving Average today for the first time since early January.
  • Nearby futures hold a slight premium to last week's cash cattle trade, signaling a bullish bias toward this week's action.
  • But bids and asking prices remain wide, signaling trade may again wait until Friday.
  • It has been some time since packers have aggressively bought supplies, but next week is also a holiday-shortened kill schedule. While packers are enjoying strong profit margins, mixed boxed beef prices have failed to impress. A heat wave in the Southern Plains could give feedlots some leverage in negotiations.
  • This morning Choice boxed beef values rose $1.08 and Select firmed 97 cents on movement of 95 loads. Traders remain watchful for a bottom in the beef market.
  • A surge in weekly beef export sales to 20,000 MT for 2013 adds support.
  • Pressure on corn prices and spillover from live cattle are lifting feeder cattle futures.

 

Lean hog futures are slightly to moderately higher in 2013 contracts, but far-deferred months are slightly lower.

  • Nearby contracts continue to benefit from the ongoing surge in the pork market. This morning, the pork cutout value rose $1.87 on solid movement of 181.4 loads.
  • This morning's weekly export sales report also signaled strong export demand, as pork exports sales surged to 18,600 MT for the week ended June 20.
  • The weeks-long product market surge has resulted in very profitable margins for packers, which is keeping cash hog bids mostly steady.
  • The roughly $2.50 discount the July contract holds to the cash hog index and the nearly $5 discount the August contract holds to it are also supportive.
     
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