Market Snapshot, Noon CT (VIP) -- May 31, 2013

May 31, 2013 07:13 AM
 

Corn futures are around 8 cents higher in the July contract and mostly 5 to 6 cents higher in deferred contracts.

  • Weather-related planting delays are boosting corn futures. While that's a new-crop issue, the tight old-crop supply situation makes it supportive for July corn futures.
  • Traders are trying to figure out how many of the remaining unplanted corn acres will be seeded to corn late, switched to soybeans and claimed as prevent-plant.
  • After several days of dry, sunny conditions this weekend, another wave of rains is forecast for next week. That means limited planting progress is likely through June 10.
  • Month-end position evening is also supportive for corn futures as traders are covering short positions established earlier this month.
  • USDA's weekly export sales report showed corn sales of 85,700 MT for 2012-13 and 789,600 MT for 2013-14. China was a noted buyer of 483,000 MT of new-crop corn.
  • The International Grains Council raised its 2013-14 world corn crop peg by 6 MMT from last month to 945 MMT, which is somewhat limiting buying interest.
  • Gulf basis is steady for immediate delivery, 1 cent firmer for last-half June delivery, a penny lower for July delivery, 9 cents lower for first-half August and unchanged for later delivery periods at midday.

 

Soybean futures are 20-plus cents higher in most contracts at midday.

  • Soybean futures continue to be supported by tight supplies and weather concerns.
  • Planting delays continue to be a primary concern, even though there is plenty of uncertainty about how many intended corn acres will eventually be switched to soybeans.
  • Rains are falling across areas of the Corn Belt, which are further delaying planting efforts. The forecast calls for a relatively dry weekend, but more rains in the forecast to return to the Corn Belt next week.
  • Ongoing signs of solid demand are also supporting beans. While USDA reported a net export sales reduction of 108,000 MT for 2012-13, sales of 756,600 MT for 2013-14 more than make up for the reduction. New-crop sales included 587,000 MT to China.
  • USDA also announced a daily sale of 30,000 MT of soyoil to Germany for 2012-13.
  • Gulf basis is 4 to 5 cents lower for June delivery and unchanged for later delivery periods.

 

Wheat futures are mixed in Chicago and Kansas City, while Minneapolis wheat futures are now mostly 3 to 6 cents higher.

  • Fallout from the discovery of GMO wheat in Oregon pressured wheat futures early, but spillover support from corn and beans has caused wheat futures to firm.
  • But the GMO wheat issue will remain a market issue until it's resolved. South Korea now says it will halt U.S. wheat shipments until tests are conducted on recent shipments, joining Japan in temporarily suspending U.S. wheat shipments. Taiwan says it is "reviewing" U.S. wheat shipments and may ask exporters to guarantee they are GMO-free.
  • Weekly wheat export sales topped expectations at 35,900 MT for 2012-13 and 728,300 MT for 2013-14.
  • Gulf wheat basis is 4 cents higher for June and July delivery, 2 cents higher for August and unchanged for September. This also signals solid demand.
  • The market is brushing off news International Grains Council raised its global wheat production forecast for 2013-14 to 682 MMT, up 2 MMT from the month prior.
  • Spring wheat planting delays in the Northern Plains, especially in top producer North Dakota, are providing support to Minneapolis wheat futures.
  • End-of-month short-covering is also providing light support.

 

Live cattle futures are slightly higher, while feeder cattle futures are weaker.

  • Futures prices are slight to moderately higher with traders reacting to reports of light cash cattle trading in Texas at $124, which is even with week ago. No trades have been reported yet in Kansas.
  • Futures are trading in a very narrow range inside of yesterday's range as traders even positions ahead of the weekend and the end of the calendar month.
  • Boxed beef values fell today with Choice dropping $1.24 to $207.31 and Select down $1.58 to $187.51. Movement was decent at 97 loads.
  • Weekly beef export sales of 19,000 MT signal improved export demand.
  • Feeder cattle futures are seeing pressure from gains in corn futures.

 

Lean hog futures are narrowly mixed at midday, with June futures slightly lower.

  • June futures are seeing slight weakness as they trade at a $1-plus premium to the cash index.
  • July futures are slightly stronger and are trading at a slight discount to the cash index. Position evening for the end of the month has traders reluctant to push prices sharply in either direction.
  • The pork cutout value fell $1.07 cents this morning and movement was light at 160 loads.
  • Positive packer margins are seen as a positive as the trade prepares for a seasonal decline in slaughter supplies and carcass weights.
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