Market Snapshot, Noon CT (VIP) -- May 30, 2013

May 30, 2013 07:16 AM
 

Corn futures are down 14 cents in July and 6 to 7 cents in most other contracts.

  • Futures are under pressure as traders take profits after two days of gains and failure to probe nearby overhead resistance.
  • Some selling pressure also emerged on news weekly ethanol production fell 12,000 barrels per day (bpd) to 863,000 bpd. Weekly stocks are listed at 16.05 million barrels, down 135,000 barrels.
  • The heavy rain that fell across Iowa again last night and are forecast to fall again tonight continues to have traders calculating the number of intended corn acres that may switch to soybeans. But traders believe "rain makes grain" and that soil moisture levels are more than amply charged to carry the crop through summer.
  • Gulf basis is unchanged at midday after showing a 7- to 10-cent gains for August delivery and a 2-cent gain for immediate delivery this morning.
  • The U.S. dollar index is lower today on the downward revision to U.S. first quarter GDP and a rise in new jobless claims last week, which is seen as tempering the selloff slightly.

 

Soybean futures are posting losses of 1 to 4 cents in old-crop contracts, while new-crop contracts have improved to mixed trade on bull spread unwinding.

  • Light profit-taking is pressuring futures after the sharp run-up in the past few days and the general mid-month upswing.
  • The continuing weather delays has some traders talking of an uptick in soybean acreage as growers switch to soybeans with the flip of the calendar.
  • But the more immediate concern is the very slow start to soybean planting and emergence, as traders expect only light progress will be made this week as the Midwest has suffered from heavy rains with more in the forecast.
  • News China bought 120,000 MT of soybeans for 2013-14 delivery has returned some buying interest to new-crop futures.
  • Gulf basis is unchanged at midday.

 

Wheat futures have pared early losses to trade around 5 to 6 cents lower in Chicago and fractionally to 3 cents lower in Kansas City and Minneapolis.

  • The market is reacting negatively to Japan canceling its U.S. western white wheat buy in its weekly tender and statements it will halt purchases of such wheat until the U.S. provides a testing kit for shipments. The European Union will also test U.S. wheat shipments for GMO content.
  • Wheat is also suffering from spillover selling in the corn pit.
  • Gulf basis slid 2 to 7 cents for May through September delivery this morning and another penny for June and July delivery at midday, also speaking to reactionary slowed exports.
  • Pressure on Minneapolis wheat futures is being limited by heavy rains on the Northern Plains that continue to delay spring wheat planting.
  • The market is shrugging off the weakness in the U.S. dollar index prompted by a downward revision in first quarter U.S. GDP and a rise in new jobless claims.

 

Live cattle futures are under pressure, with deferred contracts more than $1.00 lower. Feeder cattle futures have also softened to post moderate to sharp losses.

  • Selling pressure rose on news the boxed beef market weakened this morning. Choice boxed beef slipped 35 cents to $209.18 and Select fell 43 cents to $189.90. Movement was a moderate 101 loads, however. The weakness comes after the market saw price gains and strong movement yesterday.
  • Profit-taking is also a prime feature today.
  • The downward revision in first quarter U.S. GDP and a higher jobless claims number are also contributing to the selling pressure as traders worry about demand.
  • The market is still waiting on cash cattle trade to get underway. Showlists are up this week and futures are still well below last week's cash prices. But packers have wide margins and a cushion with which to work. Futures remain at a discount to cash.
  • Early gains in feeder cattle futures have given way to profit-taking on spillover from live cattle.

 

Lean hog futures are mostly moderately higher at midday.

  • The market continues to react favorably to the positive performance in the pork market. The pork cutout value slid 18 cents this morning but movement was a strong 238.5 loads. Both movement and prices were strong Wednesday.
  • Futures are also finding support from the weakness in grains and the U.S. dollar index.
  • The market continues to find support from news of the purchase of Smithfield Foods by China's Shuanghui International. Traders expect this to boost U.S. pork exports.
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