Weather Doesn't Concern Traders

July 22, 2013 01:17 AM

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are trading mostly 2 to 3 cents lower, soybeans are 16 and 9 cents higher in the August and September contracts, respectively, while new-crop futures are 2 to 4 cents higher and wheat futures are mixed with an upside bias. The key through today's session will be whether corn pulls beans lower or beans pull corn higher. Cattle and hog futures are expected to open mixed this morning.


* Non-threatening weather. Scattered rains pushed across the Corn Belt yesterday and overnight. The best rains in Iowa were south of I-80, while rainfall was hit-and-miss in the northern two-thirds of the state. The rains pushed off to the eastern Belt overnight, moving through central Illinois and into Indiana and Ohio this morning. This week's forecast is generally dry, though there are scattered rain chances later in the week, and temps are expected to be below normal after today. The cooler-than-normal temps and scattered rain chances are expected to continue into early next week.

The long and short of it: While the weekend rains weren't as widespread and heavy as hoped, they were enough to keep concerns with the corn crop at bay, especially with much cooler temps expected this week.

* Beans finding buyers easier than corn. The soybean market is performing much better than corn. While new-crop corn futures are under pressure and have a negative technical posture, November soybeans are finding buying interest much easier and price action remains choppy. Based on recent price action, there's a definite difference in traders' attitudes toward the two markets despite a very similar basic fundamental makeup that features very tight old-crop supplies and an expected big buildup in supplies for 2013-14. The biggest difference is that soybeans maintained their demand base despite record prices last summer, while the corn market is having to rebuild it's demand base. And the way you rebuild demand is through lower prices.

The long and short of it: Soybeans are standing tall in the face of record South American production as global demand remains strong, which is much different than the situation corn is facing as it tries to regain the demand it lost to other feedgrains over the past year due to tight supplies and the runup to record prices.

* Cattle on Feed Report mostly neutral. The On Feed and Placements categories were right in line with the average pre-report guesses at 97% and 95% of year-ago, respectively. Marketings came in a little stronger than anticipated at 96%, which topped the highest pre-report guess. The July 1 U.S. feedlot inventory was down 371,000 head from the beginning of June and 342,000 head under year-ago. The breakdown of calves placed into feedlots in June signals improved pasture conditions in many areas are guiding those decisions. The placement of lightweight and 6-weight calves was down 31.5% and 27.5% from year-ago, while 7-weight and heavyweight calves were placed at a 6.4% and 26.5% greater clip than year-ago last month. Because of the generally improved pasture conditions, ranchers are keeping cattle on grass longer and delaying the movement into feedlots as long as possible.

The long and short of it: The report data is mostly neutral, though the Marketings category was on the friendly side compared to pre-report expectations. This should support nearby live cattle, but traders will likely wait on confirmed lows in the boxed beef and cash cattle markets before actively buying futures.


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