SOYBEAN PRODUCERS: INCREASE 2013-CROP CASH SALES... Soybean futures gave us a sell signal late last week by filling the Aug. 26 chart gap. While the market has not shown followthrough selling so far this week, this is likely a pause before the market moves the next leg lower through harvest. With the soybean price structure giving encouragement to have all of your beans sold by harvest, basis still historically strong and likely the strongest it will be until next summer, and the risk that Sept. 1 stocks (2012-13 ending stocks) will be slightly higher than USDA estimated in the September Supply & Demand Report, it's time to increase 2013-crop cash sales.
Hedgers should make a 50% cash sale to get to 100% sold on expected 2013-crop in the cash market. We'll manage risk the remainder of the marketing year on the board. Hedgers should be prepared to reown a portion of 2013 soybean cash sales in long call options or futures. Cash-only marketers should make a 25% sale to get to 75% priced on 2013-crop production.
Corn futures have turned strengthened to trade 6 cents higher.
- Corn futures are higher on short-covering and spillover strength from wheat futures.
- Traders are taking notice of a recent upswing in export sales activity, which suggests prices have gone low enough to rekindle demand.
- But the upside is limited as harvest is underway and harvest pressure will keep a damper on basis until harvest crosses the 50% completion mark. Meanwhile, near-term weather forecasts are positive for the startup of harvest.
- Gulf basis firmed 2 cents for immediate delivery this morning, signaling more such demand news may be ahead. Basis is unchanged in late-morning trading.
- Lanworth raised its 2013-14 world corn production forecast today by 7 MMT to 949 MMT on expectations for a large South American crop.
- Ethanol production for the week ended Sept. 20 fell 6,000 barrels per day (bpd) to 832,000 bpd. Weekly ethanol stocks fell 565,000 billion barrels to 15.61 million barrels.
Soybean futures have turned around from a lower start and are 2 to 8 cents higher.
- Soybean futures are higher on corrective buying and spillover support from wheat futures.
- But prospects of harvest pressure coming on forecasts of wide-open weather for the next few weeks is tempering gains.
- News Lanworth raised its 2013-14 world soybean production to 284 MMT, up 3 MMT from its previous forecast on expectations for an increase in South American soybean plantings, is limiting gains.
- USDA announced a 140,000 MT daily bean sale to unknown destinations for 2013-14 delivery this morning, which is adding light support.
- Gulf soybean basis is 3 cents stronger for immediate delivery in late-morning trading, hinting more export news may be in the offing. Basis for October delivery is unchanged, up 1 cent for November delivery, unchanged for December delivery and 1 cent firmer for January delivery.
Wheat futures continue to post double-digit gains in most contracts, with HRS wheat leading the gains with increases of 14 to 18 cents for the December through May contracts.
- Wheat futures continue to charge higher on crop concerns in Argentina and signs U.S. wheat prices are viewed as competitively priced on the world market.
- Worries about freeze damage to the Argentine wheat crop continue and have traders talking about China and Brazil being forced to find new sources for wheat.
- HRS futures are the rally leaders due to initial data from the Canadian Grain Commission showing Canada's spring wheat crop has lower-than-normal protein levels.
- Recent news on the export front has signaled U.S. wheat is indeed competitively priced and the recent price break in the U.S. dollar index could make U.S. supplies even more attractive.
- Gulf SRW basis is unchanged in late-morning trading.
Live cattle futures continue to trade slightly higher while feeder cattle futures are weaker.
- Live cattle futures are higher thanks to prospects for stronger cash prices and a positive technical picture.
- Choice boxed beef weakened 45 cents this morning after recent gains, but movement surged to 161 loads, offsetting concerns about retailer resistance. In addition, Select boxed beef rose 32 cents.
- The nearly $4 premium October futures carry versus last week's $124 cash price paid in the Southern Plains is limiting selling interest in that contract.
- The October contract moved above its 100-day Moving Average last week and the 200-day Moving Average today. The December contract is above both these levels.
- Strength in the corn market is pressing feeder cattle futures lower.
Lean hog futures are slightly to moderately higher in the front three contracts. Deferred contracts are favoring the downside.
- Lean hogs continue to move higher on followthrough buying from Tuesday and the positive technical picture for hog futures.
- The market continues to be surprised by a dropoff in hog supplies from expectations. Monday's Cold Storage Report showed much-smaller-than expected supplies in storage.
- Daily hog supplies continue to run below estimates, which has traders talking about the impact of late summer/early fall heat and the Porcine Epidemic Diarrhea Virus (PEDV) on supplies. Friday's Quarterly Hogs & Pigs Report will provide another read on this front.
- Cash hog bids started steady to lower as some packers reduced kill lines due to the reduction in hog numbers coming to market.
- While chart patterns remain bullish, some worry the market is nearing overbought territory and others still look for the seasonal pattern of lower prices in the fall to begin
- The pork cutout value fell $1.18 cents this morning but movement is a strong 314.41 loads.