Market Snapshot, 10:00 am CT (VIP) -- September 23, 2013

September 23, 2013 05:08 AM
 

 

Corn futures are mostly 2 to 3 cents higher this morning.

  • The corn market is enjoying light short-covering amid ideas the downside was overdone last week. Spread unwinding with soybeans is also providing support.
  • USDA's announcement of a 197,200-MT corn sale to Mexico for 2013-14 this morning is also providing light support as it suggests that lower prices are rebuilding demand.
  • The Weekly Export Inspections Report will provide another read on export demand this morning.
  • But otherwise, the start of harvest across the Corn Belt and more active harvest across southern growing regions is limiting traders' willingness to rebuild long positions.

 

Soybean futures have chopped on either side of unchanged this morning. At present, nearby contracts are slightly lower, while far-deferred months are favoring the upside.

  • Ideas the downside has been overdone considering strong export demand is limiting selling interest in the bean market to start the week.
  • But with harvest soon to get started, upside potential remains limited to bouts of short-covering. This is pressuring basis levels at interior locations.
  • While strong demand is an underlying source of support, price action last week signaled a different catalyst is needed to spur active buying interest.
  • An uptick in China's flash HSBC purchasing managers' index to a six-month high of 51.2 signals ongoing improvement with the country's economy, which should translate to continued strong soy imports.

 

SRW wheat futures are 7 to 8 cents higher, while HRW wheat futures are enjoying gains of 5 to 7 cents. HRS wheat is 2 to 3 cents higher.

  • Wheat futures are benefiting from recent confirmation of strong demand for U.S. wheat. Weekly export inspections will provide another read on this front this morning.
  • Last week's steep decline in the U.S. dollar index makes U.S. wheat more attractive on the global export market.
  • The China National Grains and Oils Information Center says the county will import 7.5 MMT of wheat in 2013-14, up 1 MMT from its previous forecast. USDA projects 2013-14 Chinese wheat imports at 9.5 MMT.
  • Light support also comes from news Kazakhstan's grain exports from July 1 to Sept. 20 fell to 1.39 MMT from 1.87 MMT during the same period last year, according to its ag ministry.

 

Live cattle futures gapped higher on the open and futures are enjoying slight to moderate gains in early trade. Feeder cattle slightly to sharply higher.

  • Cattle futures are benefiting from a bullish Cattle on Feed (COF) Report and higher cash cattle trade on Friday.
  • The COF Report reflected even greater than expected tightening of supplies and possibly that cow-calf operators are holding back heifers for breeding. Placements for the month of August came in at the smallest level on record (since 1996).
  • Cash cattle trade in Texas and Kansas took place at mostly $124 on Friday, up $1 from the bulk of trade the week prior. In Nebraska, cash trade took place at $124 to $125, which was up 50 cents to $1.50 from the week prior.
  • But the boxed beef market was weak on Friday. Choice cuts slipped 62 cents and Select fell 94 cents, but movement was solid at 192 loads.
  • Also, futures are already at more than a $2 premium to last week's cash action.
  • Feeder cattle are being supported by strength in live cattle, which is overriding the mildly firmer tone in corn.

 

Lean hog futures got off to a firmer start, but the market has since softened to choppy trade.

  • Spillover from live cattle and ideas the recent rally may still have a bit of life in it is returning light buying interest to the lean hog market to start the week.
  • The October lean hog contract is nearly $8 below the cash hog index, with the December contract at an even wider discount.
  • Recent heat has delayed the seasonal trend for an increase in supplies and a pullback in prices. To account for this, some packers have reduced kill hours.
  • Early cash hog bids are steady to $1 higher, which is stronger than anticipated. Packers are again enjoying solid cutting margins.
  • The pork cutout value surged $1.67 on Friday, but this slowed movement to just 215.42 loads.
     
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