Market Snapshot, 10:00 am CT (VIP) -- September 4, 2013

September 4, 2013 05:14 AM

Corn futures have moved back into the lower part of their daily trading range with most contracts seeing losses of 5 to 6 cents.

  • Traders still think the U.S. will produce a record corn crop, despite crop deterioration due to recent hot, dry weather.
  • USDA lowered the amount of corn rated "good" to "excellent" by 3 percentage points to 56%. On the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), corn dropped 9 points to 346. Iowa led the decline.
  • More declines are likely ahead as just spotty showers are in the forecast and heat is moving back into the western Corn Belt today.
  • Poor end-of-season growing conditions for the late-planted crop has encouraged private crop watchers to lower their production and yield estimates. For instance, Lanworth lowered its average yield forecast to 151.6 bu. per acre for a crop of 13.33 billion bu., down 76 million bu. from its last estimate.
  • Also limiting buying interest are concerns about the corn demand, as this market was highly sensitive to higher prices last year and lower prices this year have yet to encourage strong export buys.
  • Gulf basis fell 4 cents for December delivery and it held steady for other months this morning.


Soybeans have extended early losses to trade mostly 30- to 40-plus cents lower with nearby contracts leading the decline.

  • Traders are booking some profits after yesterday's runup as the market believes that yesterday's gains were overdone. Early pressure triggered sell stops.
  • The market is not concerned about a 4-point drop in the amount of soybeans rated "good" to "excellent" to 54%. This translated to a 9-point drop on Pro Farmer's weighted Crop Condition Index (0 to 500 point scale) to 342.
  • The forecast is not favorable for a stabilization of crop conditions this week either as there are just limited precip chances and record-setting heat is expected for the upper Midwest.
  • Recent stressful conditions have caused private crop watchers to peg or lower estimates below USDA's initial estimate. Allendale expects a 39 bu. per acre soybean yield; Lanworth lowered its forecast to 40.4 bu. per acre yield for a crop of 3.114 billion bu., a 26 million bu. decline from last week.
  • Adding to the negative tone are expectations for a large 2013-14 South American crop. Recent price strength is encouragement for South American producers to expand soybean acreage intentions ahead of their planting season.
  • Gulf basis fell 2 cents for last half September delivery this morning, possibly indicating a pullback in demand.


SRW wheat futures are 2 to 5 cents lower, while HRW and HRS futures are posting slightly lesser declines.

  • Pressure on the corn market is weighing on the wheat market.
  • Egypt made purchases of 180,000 MT of Russian and Romanian wheat in its tender. This reminds the market that U.S. wheat prices are higher than those elsewhere, such as the Black Sea region.
  • But yesterday's strong weekly export inspections tally and recent strong export sales are tempering such concerns.
  • Also, yesterday's crop progress update from USDA indicated that harvest-related pressure will ease as harvest advanced to 64% complete as of Sunday.


Live cattle futures are favoring the downside. Feeder cattle are enjoying slight gains.

  • Traders are working to remove some of the $3-plus premium nearby live cattle contracts hold to last week's cash action at $123 in the Southern Plains.
  • While tighter showlist estimates this week (largely due to a drop in numbers in Nebraska) do signal higher cash prices may be seen, packers have been highly reluctant to raise bids of late.
  • Some of this reluctance stems from concerns about how retailers and consumers will react to higher beef prices now that the official summer grilling season is past.
  • But a positive sign was improved boxed beef movement of 166 loads to start the week yesterday. This came on mixed prices, with Choice cuts up 43 cents and Select down 74 cents.
  • Softer corn prices are supporting feeder cattle futures.


Lean hog futures are mixed with fall- and winter-month contracts firmer, while farther deferred futures are weaker.

  • Nearby lean hog futures are benefiting from technical buying after the market's high-range close yesterday.
  • Average hog weights in southern Minnesota and Iowa fell 1.4 lbs. the week ended Aug. 31, reminding the market that last week's heat wave led to an atypical supply tightening at this time of the year. And record-setting heat is expected to return to the upper Midwest this week, which could further delays seasonal supply expansion.
  • Meanwhile, packers are ramping up hog production following time off for Labor Day. Wide profit margins add incentive for them to do so.
  • Adding to profitable cutting margins, the pork cutout value firmed 47 cents yesterday on decent, if not strong movement of 327.1 loads yesterday.
  • Also, October futures remain at a $3 discount to the cash hog index, which is providing light support.
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