Market Snapshot, Noon CT -- (VIP) -- September 19, 2013

September 19, 2013 06:57 AM

Corn futures have pared gains a touch to trade steady to 2 cents higher.

  • The corn market continues to enjoy light short-covering amid some uncertainty about the 2013 crop and signs of improved demand. But the pullback in the soybean market and gains in the U.S. dollar index caused futures to scale back gains.
  • Weekly corn export sales of 437,400 MT for 2013-14 fell short of expectations, but the tally still represents improvement since this summer.
  • Gulf basis slid a penny for immediate shipment, signaling increased supply availability as harvest picks up.
  • Recent and expected Corn Belt rains are also limiting buying interest.

Soybean futures have softened to trade 7 to 12 cents lower through the July contract, with nearbys leading losses.

  • A limited reaction to fresh demand news this morning signals a new source of support is needed to spur the next leg higher. Early gains quickly gave way to profit-taking.
  • Thus far, nearby futures have respected key support at the wide August gap.
  • This morning's weekly export sales data showed soybean sales of 923,300 MT for 2013-14, which came in stronger than expected. Also this morning, USDA announced a 120,000-MT soybean sale to an unknown destination for 2013-14.
  • Gulf basis rose a penny for immediate delivery at midday, possible signaling more export demand news is ahead. But basis levels at interior locations are softening as harvest picks up and new-crop supplies come online.
  • Outside markets are also encouraging risk aversion today as the U.S. dollar index is firmer and the stock market and crude oil futures are under pressure.
  • Midwest rains this week are adding to investor caution as traders believe this could still help the crop hold onto yields into the finish.

Wheat futures have reined in early gains to trade roughly 6 to 8 cents higher across all three flavors.

  • Strong weekly wheat export sales of 704,400 MT for 2013-14 and a net sales reduction of 2,500 MT for 2014-15 topped expectations and eased concerns that the U.S. is losing out on export business to other countries, especially those of the Black Sea region.
  • The market is also getting a boost from the U.S. Seasonal Drought Outlook that calls for drought to persist or intensify in much of the Southern Plains. The market has recently been pressured by favorable rains in the region.
  • Reports of above-normal yields in Saskatchewan as harvest moved past half complete led to a slight pullback in gains.

Live and feeder cattle futures have extended early gains to trade mostly moderately higher.

  • Cash cattle trade has yet to get underway, but action in futures signals friendly expectations as traders have expanded the premium October live cattle hold to last week's cash action to $3.
  • Recent strength in the boxed beef market is supportive of such expectations. This morning, Choice boxed beef values slid 8 cents, but Select firmed 44 cents and movement was solid at 108 loads.
  • Showlist estimates are up in Nebraska but down at other locations.
  • Also supportive are expectations Friday's Cattle on Feed Report will reflect ongoing supply tightening.
  • Weekly beef export sales the week ended Sept. 12 of 16,800 MT for 2013 and 300 MT for 2014 represents solid export demand.
  • But packer cutting margins have tightened in recent weeks to near breakeven, which could make them unwilling to raise bids.
  • Strength in the corn market and the U.S. dollar index is tempering buying enthusiasm in the feeder cattle market.

Lean hog futures are still posting slight to moderate losses at midday.

  • Varied cash hog demand has resulted in mixed cash hog bids today. Some packers have scaled back kill hours due to limited supplies and negative margins for some.
  • Recent heat has disrupted the seasonal trend for a pullback in hog and pork prices as supplies expand. But the market senses the hog market will soon shift back to a more seasonal pattern.
  • However, selling interest remains tentative since the wide discount the October contract holds to the cash hog index and the bullish technical posture of the market indicates another runup is still possible.
  • The pork cutout value fell 60 cents this morning, but this came on strong movement of 221.28 loads.
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