Market Snapshot, Noon CT (VIP) -- June 7, 2013

June 7, 2013 07:17 AM
 

Corn futures are have firmed, with old-crop contracts up 3 to 10 cents and new-crop contracts 7 to 8 cents higher.

  • Futures are higher on spillover from strong gains from the stock market and the positively viewed jobs report. Traders view the jobs report as a sign the economic growth is picking up, and that is encouraging them to direct money into riskier assets.
  • The July contract has broke through its April and May highs and came within 2 cents of closing the downside gap at $6.76 left March 28. But the contract has since pared gains.
  • Forecasts for rain this weekend and early next week have brought buying support to new-crop corn as talk increases about reduced yields on planted acres and other acres being switched to soybeans or left unplanted and claimed as Prevent Plant.
  • Gulf corn basis firmed 4 cents for last-half June delivery and is unchanged for other delivery periods in late-morning trade.

 

Soybean futures surged on the open this morning, but the market has since reined in gains in old-crop contracts. July futures are slightly higher while new-crop beans are 15 to 20 cents higher.

  • A "risk-on" attitude by traders prompted by this morning's positively viewed jobs report has fund managers moving money into soybean futures.
  • But dollar strength is tempering gains in the old-crop contracts.
  • Prospects for continuing planting delays is gaining market attention as more rain and cool temps are expected for the Corn Belt this weekend. Above-normal precip is also expected for the eastern Belt next week.
  • Tight supplies continue to limit selling interest to profit-taking in old-crop soybeans.
  • Gulf basis is unchanged for deliveries through early September and 1 to 2 cents higher for later delivery following a 3- to 4-cent slide in Gulf basis for July delivery early this morning.

 

Wheat futures are choppy, with Chicago and Kansas City wheat 2 to 3 cents lower and Minneapolis futures 1 to 4 cents stronger.

  • Chicago and Kansas City futures are balancing spillover strength from corn and soybean futures against pressure from strength in the U.S. dollar index and prospects of harvest pressure from the start of HRW harvest.
  • Also limiting buying interest was the report from the G-20's Agricultural Market Information System today that forecast global wheat production to hit a record 702 MMT in 2013, up 6.5% from year-ago.
  • Crop concerns in the U.S. are limiting selling interest with the forecast for the Southern Plains calling for hot (100-degree-plus), dry weather early next week.
  • The Minneapolis market is stronger on continuing planting delays.
  • Gulf SRW basis is 2 cents weaker for June delivery and 1 cent stronger for August delivery at midday.

 

Live and feeder cattle futures continue to post slight losses.

  • Cash cattle trade has still not gotten underway with packers and feedlots still several dollars apart, according to reports. In the Southern Plains, packers are bidding $121 while feedlots are asking $125. The Southern Plains saw $124 trade last week.
  • Weakness in the boxed beef market is making packers reluctant to lift bids.
  • Choice boxed beef values fell $1.69 this morning and Select slipped 83 cents. Movement is a slim 78 loads.
  • Strength in the corn market and weakness in live cattle are weighing on feeder cattle futures.

 

Lean hogs are slightly higher.

  • The technical picture remains positive for hog futures with Thursday's gap being left open and unchallenged in this morning's action. The longer the market finds buying support at yesterday's low of $95.25 in July futures, the more confidence bulls will have.
  • The pork cutout value firmed 24 cents today, and movement is a moderate 169.6 loads.
  • With the seasonal trend toward decreasing slaughter supplies and carcass weight fully underway, traders expect cash prices to remain steady to firm, though negative cutting margins are a potential hurdle.
  • The risk-on attitude prompted by this morning's jobs report is supportive to hog futures as pork is viewed as competitively priced versus beef despite the potential tamping in export demand.
     
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