SOYBEAN PRODUCERS: INCREASE NEW-CROP CASH SALES... November soybean futures have rallied more than $1 from last week's low to challenge the long-term downtrend on the daily chart. The two previous tests of this trendline in June and July saw buying interest dry up and resulted in bull traps. Therefore, soybean hedgers and cash-only marketers are advised to sell 30% of expected 2013-crop production via cash forward contract for harvest delivery to get to 50% forward priced on new-crop. If futures extend the corrective rally, we'll advise additional cash sales and/or reownership via long call options.
Corn futures have extended overnight gains to trade 7 to 8 cents lower.
- End-of-week profit-taking is pressuring corn futures today as traders look to take advantage of yesterday's gains.
- Much uncertainty exists as to the state of this year's crops as yesterday's initial Farm Service Agency acreage data pointed to much higher prevent plant acres than the market expected. But USDA still anticipates a record-large crop.
- Meanwhile, expanding and intensifying of drought in the western Corn Belt, including the key production state of Iowa, is shifting some attention back to the weather.
- The outlook for next week calls for above-normal temps for the northern U.S. and below-normal precip for the western Belt. This raises concern about kernel abortion.
- Traders will pay close attention to midday weather updates as they position themselves ahead of the weekend. If forecasts remain as they currently are, some late buying interest may develop, though attitudes are still generally negative.
- Gulf basis is up 8 cents for immediate delivery but down 10 cents for the latter half August.
Soybean futures have improved to trade fractionally to 4 cents higher.
- Traders are working to even positions ahead of the weekend and the start of the Pro Farmer Midwest Crop Tour, which will provide more insight as to the likely size of this year's corn and soybean crops.
- Some light bargain buying has returned to the market following USDA's announcement China bought 284,000 MT of new-crop beans and unknown destinations purchased 126,000 MT of soybeans for 2013-14 delivery this morning.
- End-user buying has picked up notably in recent weeks, signaling prices are at value levels and possibly some concern about the 2013 crop.
- The weather is getting a bit more attention as normal to above-normal temps and a lack of precip through the 10-day window is not beneficial for pod setting and pod filling.
- Plus, the crop will need a long fall to reach full yield potential as the crop was planted late and cool temps have slowed development.
- Midday weather updates could well set the tone heading into the close.
- Gulf soybean basis fell a dime for August delivery, but it firmed 5 to 15 cents for September delivery. Basis for deferred delivery was steady to 3 cents higher. This signals more export demand news may be ahead.
Wheat futures are 7 to 9 cents lower for SRW wheat, while HRW wheat is 5 to 6 cents lower and HRS wheat is around 4 to 5 cents lower.
- Wheat futures do not have the fundamental support to stand on their own, especially with spring wheat harvest-related hedge pressure building. Thus, the wheat futures are following action in the corn market.
- The market remains concerned about the competitiveness of U.S. wheat prices. A rebound in Black Sea region production means that area will likely keep its prices below those of the U.S. Yesterday's weekly export sales were down from recent strong tallies.
- Indian corn exports are expected to plunge 40% in 2013-14 due to crop damage from late-season rates that pushed prices up sharply.
- South Korea bought a total of 73,300 MT of U.S. wheat overnight, but major purchases have been absent.
Live cattle futures are off to a choppy start, while feeder cattle futures are slightly to moderately lower.
- Traders are evening positions as they wait for cash cattle trade to begin.
- Expectations are for $1 higher cash cattle trade today compared with last week's $121 action in the Southern Plains.
- Such expectations are supported by tighter showlist estimates this week, strong packer profit margins and gains in boxed beef prices this week. Thus, firmer cash action is already factored into futures prices.
- Firmer beef prices have slowed movement of late, however, which adds a note of caution.
- Traders in the feeder cattle market are taking some profits ahead of the weekend. Dollar strength is encouraging to that end.
Lean hog futures posting slight losses amid light trading volume.
- Lean hogs are facing light profit-taking pressure due to expectations that a seasonal pullback in demand and a softening in the cash market is ahead as supplies typically build seasonally this time of the year while pork demand slows following a surge of Labor Day buys.
- But selling interest in nearby contracts is being limited by the wide, discount they hold to the cash hog index.
- The pork cutout value fell 71 cents Thursday and movement slowed to 271.3 loads.
- But packer cutting margins remain in the black, which is keeping the cash market mostly steady today.
- Outside markets are a mixed bag with the U.S. dollar index and the stock market posting slight gains.