Market Snapshot, 10:00 a.m. CT -- (VIP) -- September 20, 2013

September 20, 2013 05:00 AM

Corn futures have softened to post losses of 6 to 8 cents.

  • Corn futures are facing spillover pressure from soybeans as well as some end-of-week risk reduction by market participants.
  • Recent rains could help crop condition ratings to hold steady in Monday's update from USDA. Wetter weather is also making it tough for the corn market to find buying interest.
  • Harvest is picking up and early results from the eastern Corn Belt have thus far impressed.
  • This has also caused basis to slip a penny for immediate delivery this morning, while basis was steady to 2 cents lower for deferred delivery months.

Soybean futures have softened to post losses in the mid to upper 20s.

  • Technical selling pressure is weighing on bean contracts this morning as futures have broke through the bottom of the wide August gap after testing that level yesterday.
  • Rains in the Corn Belt this week are thought to be improving yield prospects for those fields that have not been shutdown early.
  • Therefore, traders are reducing their long exposure and unwinding some spreads with corn ahead of the weekend and USDA's Crop Progress and Condition Report on Monday.
  • The market is not overly concerned about some forecasts that note the possibility of weekend frost chances for the upper Midwest.
  • Harvest is picking up, pressuring futures and basis prices. Gulf basis slipped 2 cents for immediate delivery this morning. Basis at interior locations is also trending steady to lower.

Wheat futures have softened to trade around 11 cents lower for SRW wheat, while HRW is down 9 to 10 cents and HRS is posting losses of 3 to 8 cents.

  • Traders are taking advantage of a mildly firmer U.S. dollar index and yesterday's upside day of trade by booking some profits
  • Spillover pressure from corn and a lack of fresh export news increases the market's vulnerability to profit-taking.
  • Major rain in the forecast for the Southern Plains means the HRW and SRW markets are leading the decline.
  • But downside risk remains limited by ongoing export demand strength for U.S. supplies and ideas this could improve further after this week's major decline in the U.S. dollar index.

Live cattle futures are seeing choppy trade this morning. Feeder cattle futures posted slight gains on the open, but the market has since softened to mixed trade.

  • The spread between bid and asking prices has narrowed a bit in Nebraska, but trade is nevertheless expected to hold off until after the release of this afternoon's Cattle on Feed (COF) Report.
  • Last week, sales took place at $123 on the Southern Plains, which is nearly $3 below front-month futures prices.
  • The COF report is expected to show all categories well below year-ago levels, with Placements expected to come in around 91.6% of year-ago.
  • Feeder cattle futures are also benefiting from expectations for tightening calf supply prospects as well as weakness in the corn market.
  • The boxed beef market is providing little direction this morning. Yesterday, Choice cuts fell 28 cents and Select firmed 39 cents and movement slowed a bit to 173 loads.
  • Traders will also have a Cold Storage Report to digest Monday. Pre-report expectations are for frozen beef stocks as of Aug. 31 to decline 1.5% from the month prior to 6.8 million lbs., thanks to strong export demand. But this would still be up 5.6% from year-ago levels.

Lean hog futures gapped lower on the open and the market is posting moderate to sharp losses.

  • Traders are reducing long exposure in lean hogs to wrap up the week as the market has recently given some indications it may be working on a top.
  • The market expects hog supplies to soon shift back to a more seasonal pattern of expansion and for the cash market to drop as some packers have seen margins dip into the red this week. However, above-normal temps are in the forecast again next week.
  • Therefore, traders are not paying much attention to the widening discount the October contract holds to the cash index, which continues to rise.
  • Adding light pressure, the pork cutout value slipped 23 cents yesterday and movement slowed to 339.11 loads.
  • Traders are also beginning to prepare for a Cold Storage Report Monday that is expected to show frozen pork supplies at the end of August at their second highest level on record for the month at 553.3 million lbs., down 5.52% from year-ago but 12.9% above the five-year average.
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