Market Snapshot, Noon CT -- Advice (VIP) -- September 5, 2013

September 5, 2013 07:11 AM
 

NITROGEN ADVICE FOR CORN PRODUCERS... Pro Farmer Inputs Monitor has issued advice on covering fall anhydrous needs. Inputs Monitor subscribers should go to your website for details on booking fall nitrogen needs.

Corn futures remain under pressure with most contracts down 7 to 9 cents.

  • Ideas corn production will be record-large and that producers are overstating the impact of recent stressful conditions are weighing on the corn market. The start of harvest and reports of better-than-expected yields is also weighing on corn.
  • Strength in the U.S. dollar index thanks to unrest in Syria and positive U.S. economic data is adding pressure.
  • Ethanol production the week ended Aug. 30 fell 1,000 barrels per day (bpd) to 819,000 bpd. Ethanol stocks slid 34,000 barrels to 16.22 million barrels.
  • While there are scattered rain chances for the Midwest over the next five days, accumulation is expected to be light and the event is not expected to be widespread.
  • More heat is in the forecast, which would further stress a crop that has already seen the ninth driest July and seventh driest August on record for the No. 1 producing state of Iowa.
  • Private crop watchers continue to lower their crop pegs. INTL FC Stone lowered its forecast by 51 million bu. to 13.942 billion bu., on a national average yield of 156.4 bu. per acre.
  • On the demand front, a 13-cent surge in Gulf basis for immediate delivery at midday signals some fresh demand news may be on the horizon.
  • China's Development and Research Center says the country may lower its self-sufficiency rate for corn from 95% to 80%. But this is being brushed off as a long-term bullish factor.

 

Soybean futures have reversed course to trade higher. September soybeans are posting double-digit gains, while mostly new-crop contracts are 1 to 5 cents higher.

  • Corrective short-covering is lifting the soybean market amid ideas prices have dipped far enough to spur strong export demand and amid uncertainty regarding the 2013 crop.
  • While there are scattered rain chances in the five-day forecast, major, widespread precip is needed to stabilize a deteriorating crop. Heat in the Midwest last week and this week intensified drought and caused pod abortion.
  • In response, private crop watchers have lowered their production and yield estimates. Today, INTL FC Stone lowered its soybean crop estimate by 163 million bu. to 3.146 billion bu. on a national average yield of 41.2 bu. per acre.
  • Gulf basis held steady for immediate delivery, softened a penny for last half September delivery but firmed 1 cent for October and November delivery.

 

SRW wheat is mostly 5 to 6 cents lower. HRW and HRS wheat are mostly 5 to 7 cents lower.

  • Strength in the U.S. dollar index and losses in the corn market continue to weigh on wheat futures.
  • But anticipation of tomorrow's export sales report has helped the SRW market to move off its lows as recent reports have signaled solid demand for U.S. wheat despite the lack of big, attention-grabbing purchases.
  • Also limiting pressure is news Russia's deputy ag minister says the country may export less wheat due to increased competition and softer global demand. The ministry expects 2013-14 wheat exports of 18 MMT to 20 MMT and production at 90 MMT.

 

Live cattle futures remain under pressure.

  • Cash cattle uncertainty is pressuring live cattle as traders wait for cash cattle trade to begin.
  • At least steady prices are expected compared with last week's trade, but this is already factored into prices, opening the door for some profit-taking.
  • Showlists are tighter this week and they are expected to decline going forward.
  • But the boxed beef market pulled back from yesterday's strong performance this morning. Choice and Select boxed beef cuts fell 42 and 14 cents, respectively, and movement was decent but not impressive at 108 loads.
  • This keeps ideas that consumers and retailers will resist high prices close at hand.
  • Beef exports for the month of July rose 21% in terms value relative to year-ago, according to analysis of USDA data by the U.S. Meat Export Federation.
  • Lower corn production estimates from private crop watchers have raised feed supply concerns and pressured feeder cattle futures.

 

Lean hog futures have filled this morning's wide upside gap and settled into a choppy trading range. But October hogs are still holding onto slight gains.

  • A surge to new contract highs gave way to profit-taking this morning. But as the pullback did little technical damage, bulls maintain a slight advantage in the market.
  • Recent heat has reduced hog weights and resulted in contra-seasonal cash market strength this week. Today, cash hog bids are mostly steady.
  • Pork movement was strong again this morning, but this came on a $2.50 plunge in the pork cutout value, largely due to a $4-plus slide in ribs. Packers are increasing slaughter runs after the Labor Day holiday.
  • But traders are wary about how long this upswing will last; the seasonal trend calls for prices to soften as supplies build into fall.
     
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