Market Snapshot, Noon CT -- (VIP) -- September 26, 2013

September 26, 2013 07:05 AM

Corn futures have not strayed far from unchanged. Ahead of midday, the market is narrowly mixed with nearbys favoring the downside.

  • Light profit-taking is pressuring the corn market today as strong early yield reports from both sides of the Corn Belt remind of expectations for a large crop.
  • Also, history shows that Monday's Quarterly Grain Stocks Report may be more likely to favor market bears than bulls. Pre-report expectations are for USDA to set 2012-13 carryover at 688 million bushels.
  • But on the other hand, weekly export sales of 640,100 MT for 2013-14 topped expectations and signal prices are rebuilding demand.
  • Gulf basis jumped 4 cents for immediate delivery this morning, signaling more demand news may be ahead.
  • Positive news on the demand front also comes from China. A Chinese trade executive said he expects the country's self-sufficiency corn rate could fall to 93% by 2018 and 90% by 2020 from the current 95% level. This is the third official to make comments about the country's need to rely more heavily on imports going forward.
  • Also limiting pressure is news the International Grains Council lowered its forecast for 2013-14 global corn production by 2.2 MMT to 943.2 MMT.

Soybean futures are 5 to 6 cents lower, with nearbys leading declines.

  • Soybean futures are under pressure thanks to reports of better-than-expected yields. The availability of fresh supplies has pressured basis levels around the country, despite overall supply tightness.
  • Expectations USDA will set 2012-13 carryover at a small 126 million bu. next week is helping to limit pressure.
  • The came can be said for weekly soybean export sales of nearly 2.817 MMT -- just the third time on record weekly export sales have surpassed 2 MMT and the highest figures since 1990. The tally topped lofty expectations, but the market was already aware of large purchase agreements with China, limiting the impact of this news.
  • Gulf basis was steady to a penny higher at midday, possibly signaling more export business is ahead.
  • News China sold just 250,022 MT of soybeans out of the 501,006 MT it put up for auction this week -- the smallest sale in about a month despite lower prices -- is also limiting pressure.

The wheat market has firmed to trade mostly 4 to 8 cents across all flavors.

  • Wheat is giving indications it has put in a low on the charts, which has encouraged an increase in speculative buying today.
  • The risk of more frost in Argentina this weekend is adding support, though this is countered by reports frost concerns earlier this week were overstated.
  • In addition, traders are beginning to recognize that demand for U.S. wheat is and has been quite strong.
  • Weekly export sales of 620,200 MT met traders expectations and represents solid demand. Exports the week ended Sept. 19 of 1.029 MMT mark the first time since 2007 that exports have topped 1 MMT for two consecutive weeks.
  • Gulf basis firmed 5 cents for 2013 delivery this morning, also signaling strong export demand.
  • Meanwhile, the International Grains Council has raised its 2013-14 global wheat production forecast by 2 MMT to 693 MMT.

Live cattle futures remain choppy at midday, while feeder cattle futures are enjoying slight to moderate gains.

  • Traders are taking advantage of recent gains by booking some profits today as they wait for cash cattle trade to get underway.
  • Steady to higher cash cattle trade is expected thanks to tighter showlists, but a $3-plus premium is already factored into prices, opening the door for some pressure on nearby contracts. Narrower profit margins could make packers more cautious about raising bids.
  • Choice and Select values firmed 36 cents and 1 cent, respectively, this morning and movement was solid at 117 loads. This also helps make a case for higher cash trade.
  • But beef export sales slowed notably the week ended Sept. 19 to 9,300 MT from 17,100 MT the week prior.
  • Softer corn prices on better-than-expected early harvest results is lifting feeder cattle futures today.

Lean hog futures continue to face moderate pressure in most contracts.

  • Profit-taking is pressuring the market as some contracts moved into overbought territory and amid signs the cash market is returning to more seasonal patterns.
  • The cash hog index has declined the past two days and hog bids are steady to lower again today. The discount the October contract holds to the cash hog index has narrowed to $5.
  • Adding light pressure, the pork cutout value slid 36 cents this morning, though movement was decent at 168.36 loads.
  • But selling interest is being somewhat limited by positioning for the Quarterly Hogs & Pigs Report on Friday. The report is expected to show all hogs and pigs on Sept. 1 at 98.6% of year-ago levels as the porcine epidemic diarrhea virus (PEDV) has likely taken a toll on the pig crop. But kept for breeding is expected to come in at 101.5% of last year's level as producers anticipate cheaper feed prices ahead.
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