Market Snapshot, 10:00 am CT (VIP) -- September 11, 2013

September 11, 2013 05:08 AM
 

Corn futures are choppy in light pre-report trade.

  • Corn futures are choppy as traders even positions ahead of Thursday's Crop Production and Supply & Demand Reports from USDA.
  • Traders continue to prepare to Thursday's reports with analyst surveys indicating they expect USDA to lower its national average yield estimate to 153.9 bu. per acre for a 13.646 billion bu. crop, down 117 million bu. from August and for USDA to cut its 2013-14 carryover peg by 140 million bu. from last month to 1.697 billion bushels.
  • Weather remains unfavorable for a positive finish for this year's crop. While the forecast calls for cooler temperatures for the Midwest, precipitation chances remain slight although a few light showers are working across the Corn Belt today.
  • The market is finding some support from reports U.S. weekly ethanol output rose 29,000 barrels per day (bpd) to 848,000 bpd. U.S. weekly ethanol stocks rose 53,000 barrels to 16.27 million barrels.
  • A Taiwanese trade delegation on Tuesday signed non-binding letters of intent to buy 5 MMT of U.S. corn and 500,000 MT of U.S. distillers dried grains (DDGs) over the next two years.
  • The market is feeling some pressure from news out of China that country expects its corn crop will be record-large at 215 MMT, up 4.6% from year-ago, according to China National Grain and Oils Information Center (CNGOIC). Chinese total grain production is also expected to be record-large at 589.57 MMT.
  • Also adding some pressure is news Ukraine's agriculture ministry has raised its forecast for the country's 2013 corn harvest to an all-time-high of 29 MMT to 30 MMT from the previous estimate of 26 MMT.
  • Interior corn basis weakened again as harvest nears, adding selling pressure to futures. Some points in Iowa report declines of 10 to 25 cents for immediate delivery. However, Gulf basis bids firmed 1 to 3 cents in early trading this morning.

 

Soybean futures are 1 to 3 cents higher for new-crop contracts.

  • Soybean futures are slightly higher as traders square positions ahead of Thursday's monthly crop reports from USDA.
  • Traders are keeping an eye on the weather, which does call for a cooling in temperatures across the Midwest and slight chances of isolated showers. But forecasts still indicate temperatures will remain above normal and precipitation levels will be below normal.
  • Pre-report expectations for USDA's reports on Thursday point to a national average yield of 41.3 bu. per acre for a 3.149-billion-bu. crop, down 106 million bu. from last month and for USDA to trim 2013-14 carryover to around 161 million bu., down from 220 million bu. last month as a result of the smaller crop estimate.
  • Gulf basis is mixed in early trading with immediate delivery 1 cent higher but last-half September 7 cents weaker, October unchanged, and November-December delivery 1 cent lower.

 

Wheat futures are mixed. SRW and HRW are mostly 2 to 4 cents lower and HRS is fractionally higher.

  • The market is not getting much support from news USDA reported a sale of 120,000 MT of HRW wheat to Nigeria. In addition, South Korea purchased 23,000 MT of U.S. wheat overnight.
  • Traders are looking ahead to Thursday's reports. Traders look for USDA to raise carryover by around 5 million bu. from last month to 556 million bushels. Report data for corn could be the larger driver of post-report action for the wheat market.
  • Gulf basis for SRW wheat is stronger this morning with immediate delivery 19 cents firmer, last-half September 21 cents stronger. October through December delivery is unchanged.

 

Live cattle and feeder cattle futures are slightly higher in most contracts.

  • Live cattle futures are slightly higher on short-covering as traders believe cash prices may be bottoming ahead of a seasonal rally.
  • But news on the wholesale beef front remains negative as boxed beef movement slowed to 188 loads Tuesday despite a 60-cent drop in Choice cuts and a $1.12 drop in Select values.
  • The weakness in boxed beef coupled with a rise in showlists hints feedlots may not get higher prices for cash cattle this week.
  • But traders are reluctant to press prices lower as seasonal trends suggest cash cattle prices and strong beef demand will rise into the fall.
  • A lack of buying interest in corn is helping support feeder cattle futures.

 

Lean hog futures are weaker this morning.

  • Light profit-taking is being seen in lean hog futures this morning.
  • But selling interest is limited as the cash hog market is steady to firmer as packers work to fill in slaughter runs.
  • With temperatures expected to cool somewhat, traders look for weights and hog runs to return to more normal levels.
  • Traders are ignoring the continuing strength in wholesale pork. The pork cutout value firmed 45 cents and movement was a strong 407.3 loads Tuesday. .
  • The cash hog index has edged higher again with the October lean hog contract now at nearly a $2 discount to the index, which is limiting selling pressure.
     
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