Market Snapshot, Noon CT (VIP) -- June 28, 2013

June 28, 2013 07:01 AM
 

New-crop corn futures turned sharply lower in reaction to USDA's much-higher-than-expected acreage estimate. Meanwhile, July corn is pivoting around unchanged.

  • New-crop corn futures plunged in reaction to USDA's surprising upward revision to its March acreage intentions data.
  • USDA pegs planted corn acreage at 97.379 million acres, up from 97.282 million in March and well above expectations for a reduction to around 95.34 million acres.
  • The lengthy spring planting season has resulted in an increase in producers claiming prevent plant, which puts more uncertainty as to how many acres actually have been planted and will be harvested.
  • Meanwhile, USDA's Grain Stocks Report reflected a tighter-than-expected old-crop supply situation. It pegs June 1 corn stocks at 2.764 billion bu., below expectations of 2.856 billion and below 3.148 billion bu. last year at this time.
  • Today is the start of the delivery process for July corn futures; as expected, no deliveries were posted.
  • December corn futures violated support at the May low and are posting sharp losses, though the contract has moved off session lows

 

Soybean futures are mixed, with July up 12 cents and new-crop posting double-digit losses.

  • Soybean futures initially turned sharply lower on spillover from corn, but the market has moved off early lows as traders digest the smaller-than-expected soybean acreage estimate.
  • USDA pegs planted soybean acreage at 77.728 million, up just slightly from 77.126 projected in March. Traders had expected soybean acreage closer to 78.024 million acres.
  • But traders recognize the acreage situation is still not fully known as producers are scrambling to wrap up planting efforts.
  • Meanwhile, USDA's Grain Stocks Report reflected a tighter-than-expected old-crop supply situation. It pegs June 1 soybean stocks at 435 million bu., below expectations of 441 million bu. and 667 million last year at this time.
  • November soybean futures violated support to post a monthly low but have returned to near the middle of today's trading range. But the contract is still working on weekly losses.
  • As expected, no deliveries were posted against July soybean futures.

 

Chicago and Kansas City wheat futures are posting losses of mostly 8 to 14 cents, with much lighter losses being posted in most Minneapolis contracts.

  • Much of the pressure is coming on spillover from sharp losses in neighboring pits.
  • But a higher-than-expected spring wheat acreage peg of 12.295 million acres is weighing on the market. However, the projection represents a drop from the March intentions peg of 12.701 million acres.
  • Meanwhile, USDA's Grain Stocks Report sets 2012-13 wheat carryover at 718 million bu., which is well below expectations of 750 million bushels and 743 million bu. last season.
  • Ongoing harvest-related hedge activity continues to weigh on the Chicago and Kansas City wheat markets. July Chicago wheat hit its lowest level since July 2010 today.
  • Also, Japan is looking to replace U.S. western white wheat for the first time in over 50 years due to the limited discovery of GMO material in one field in Oregon. But trade sources say Japanese mills are used to handling U.S. wheat and don't want to switch.
  • A forecast by a Ukrainian ag forecaster that the country's exports will hit 9.2 MMT in 2013-14, a 37% increase from the previous marketing year, is adding pressure.

 

Live cattle futures remain under pressure, with weakness in the corn market helping to lift feeder cattle futures.

  • Live cattle futures remain under pressure as traders wait on cash cattle trade to begin.
  • Negative outside markets are contributing to weakness. Strength in the dollar and weakness in the U.S. stock market are hampering buyers.
  • Meanwhile, traders continue to wait on the cash cattle market for direction. Nearby contracts are at a $1-plus premium to last week's cash action, signaling a friendly bias toward this week's cash trade.
  • June live cattle expire at noon CT today.
  • Choice beef values firmed 14 cents this morning and Select softened by 36 cents, with just 78 loads of cuts and trim changing hands.
  • Sharp weakness in the corn market is encouraging buying if feeder cattle futures. Live cattle futures have also improved technically this week.

 

Lean hog futures have extended losses, with most contracts posting sharp losses.

  • Negative outside markets triggered early profit-taking pressure, with traders focused on evening positions ahead of this afternoon's Hogs & Pigs Report.
  • The report is expected to reflect mild expansion, which is causing traders to lighten their long exposure to the market following recent gains. Traders look for All Hogs & Pigs to come in at 100.6%, Kept for Breeding at 99.9% and Kept for Marketing at 100.7% of year-ago.
  • Also, there is concern about pork demand as we enter what is typically the hottest weeks of the summer. A $2.05 plunge in the pork cutout value yesterday (largely thanks to $15.11 drop in bellies) and light movement of 271.6 loads adds to such concerns.
  • This morning, the pork cutout value slid another 67 cents on light movement of 129.1 loads.
  • Cash hog bids are steady to lower as packers are buying for a holiday shortened week. Packers are still enjoying double-digit profit margins.
  • July lean hog futures so far have remained within the boundaries of yesterday's wide trading range. Increased price volatility at high prices is often a clue that a market is working on a major top.
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