Market Snapshot, 10:00 am CT -- (VIP) -- September 26, 2013

September 26, 2013 05:07 AM

Corn futures are favoring a weaker tone in mixed trade.

  • Corn futures opened slightly weaker following yesterday's slight gains but futures have seen back-and-forth price action.
  • Reports of 200-bu.-per-acre yields in the eastern Corn Belt and better-than-expected yields in some areas of the western Corn Belt are limiting buying interest.
  • With harvest progressing, basis continues to weaken in interior markets. However, Gulf corn basis is unchanged in early morning trading.
  • Traders are beginning to even positions ahead of Monday's key Quarterly Grain Stocks Report because it sets 2012-13 carryover. Currently traders expect the report to show end-of-marketing-year corn stocks at 688 million bushels.
  • Limiting sales pressure is today's weekly corn sales of 640,100 MT for 2013-14 which came in above traders' expectations. This suggests prices have fallen low enough to begin rebuilding demand.
  • A Chinese trade executive said he expects the country's self-sufficiency corn rate could fall to 93% by 2018 and 90% by 2020 from the current 95% level. This indicates growing export potential for U.S. corn.
  • Also limiting declines is news the International Grains Council has lowered its forecast for 2013-14 global corn production by 2 MMT to 943 MMT.

Soybean futures are 4 to 7 cents lower, with nearbys leading declines.

  • Soybean futures are weakening on reports of better-than-expected yields.
  • Weakening basis levels in interior market is adding to the price pressure. Meanwhile, Gulf basis firmed by a penny for October delivery.
  • Traders note this morning's weekly export sales data was stronger than expected, but say it's priced into the market.
  • Weekly sales of nearly 2.817 MMT were mostly to China and came in above expectations. This was confirmation of previously announced purchase agreements. However, this week's sales are the largest since Jan. 4, 1990, and marks only the third time weekly sales have topped 2 MMT.
  • Meanwhile, China sold 250,022 MT of soybeans out of the 501,006 MT it put up for auction this week. This is the smallest sale in about a month even though prices have declined.

SRW wheat is 2 to 4 cents higher, HRW is up 3 to 4 cents and HRS is mostly 1 to 4 cents higher.

  • Wheat futures have recovered from a weaker start to daytime trade on indications a near-term low is in place.
  • Traders initially reacted to news the cold temperatures that swept across Argentina may not have caused as much damage as previously thought. However, more cold temperatures are expected this weekend..
  • Wheat futures continue to gain support from realizations U.S. wheat is competitively priced on the global market.
  • This morning's weekly export sales data shows sales of 620,200 MT coming within traders' expectations, with exports of more than 1 MMT. For the first since 2007, exports have topped 1 MMT for two consecutive weeks.
  • Meanwhile, the International Grains Council has raised its 2013-14 global wheat production forecast by 2 MMT to 693 MMT.
  • Wheat basis remains unchanged at interior points as well as at the Gulf.
  • Live cattle futures are choppy while feeder cattle futures are moderately higher.
  • Live cattle futures are choppy as traders wait on clearer direction from the cash market.
  • October futures continue to hold a $3-plus premium to last week's $124 cash cattle trade, which indicates traders expect packers to raise bids. But packers have resisted doing so which means cash trade will be delayed until tomorrow.
  • The wholesale beef market has softened as the week progresses, but movement has improved, giving traders mixed signals.
  • Choice beef values hold more than a $16 premium to Select, which reflects tight supplies of higher-quality cuts.
  • The weak open in corn futures is supporting feeder cattle futures.

Lean hog futures are moderately to sharply lower with nearbys leading losses by trading #1-plus lower.

  • Profit-taking has overtaken the market after recent sharp gains amid feelings the market has become overbought. The result is a gap-lower opening.
  • However, the sharp decline has only increased the discount that October futures hold to the cash index. This may limit trader willingness to continue to press prices lower.
  • In addition wholesale pork prices continue to improve. The pork cutout values rose $1.40 yesterday and more than 466 loads of cuts changed hands. This means strong demand which should boost packer willingness to bid up for supplies.
  • However cash hogs are steady to weaker today as packers have reduced kill requirements in the face of tighter supplies of market-ready hogs.
  • Traders are also focused on evening positions ahead of tomorrow afternoon's Hogs & Pigs Report which is expected to show supplies have tightened for the near-term, but that expansion plans are in place.
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