Market Snapshot, Noon CT -- (VIP) -- September 9, 2013

September 9, 2013 06:55 AM
 

Corn futures have extended early losses to trade double-digit lower in the front-month, while the rest of the market is 4 to 6 cents lower.

  • Demand concerns and ideas the U.S. will produce a record-large corn crop despite late-season weather challenges continue to weigh on the corn market.
  • Weekly corn export inspections of 9.827 million bu. fell short of expectations and declined nearly 8 million bu. from last week. This raises concerns about resistance to higher prices.
  • In this afternoon's Crop Condition Report, traders expect USDA to peg 54% of the U.S. corn crop "good" to "excellent," down 2 percentage points from last week. If realized, this would be the fourth consecutive week of declines.
  • Also, traders are paying more attention to the reduced frost risk for the corn crop than to the yield loss accelerated development implies. Thus, the market is not concerned about record-setting Midwest heat and building drought.
  • Harvest is getting started in some locations, pressuring basis levels at the Gulf and interior locations.

 

Soybean futures softened ahead of midday. September is now down 30 cents with the rest of the market mostly 5 to 11 cents lower.

  • Early gains gave way to profit-taking as traders believe weather damage that is expected to be reflected in USDA's Crop Production Report Thursday has already been factored into prices.
  • Heat and dryness last week is expected to result in another decline in USDA's crop condition rating today. Pre-report expectations are for a 3-percentage-point decline in the amount of soybeans rated "good" to "excellent" to 51%.
  • Subsequent declines are likely as temps are expected to near or surpass 100°F in the key production state of Iowa today.
  • Ideas the bean crop could still add some bushels if there is a late-season rain is also pressuring the market, though there is little precip in either the five-day or the 6- to 10-day outlook.
  • Weekly soybean export inspections of 2.222 million bu. improved from last week and met expectations, though the tally is still light compared to year-ago figures.
  • The market is also brushing off confirmation of strong Chinese soy demand. The country imported 6.37 MMT of soybeans in August, which is 44.1% higher than year-ago.
  • An Agritrend forecast that Argentina will produce a record-large soybean crop of 53 MMT to 54 MMT as producers shift corn acres back to beans is adding light pressure, though the crop has not yet been sown.

 

SRW and HRW wheat futures are roughly 5 to 7 cents lower while HRS wheat is seeing losses of 1 to 5 cents.

  • Wheat futures continue to follow corn's lead, leaving the market vulnerable to selling pressure.
  • Also, favorable precip in the forecast for the Southern Plains points to improved planting conditions for the winter wheat crop.
  • The market is ignoring another week of strong weekly wheat export inspections. Wheat inspections of 31.589 million bu. helped keep the pace of exports well ahead of that needed to meet USDA's export forecast. The tally met expectations.
  • Favorable outside markets are helping to limit selling pressure.

 

Live cattle futures continue to post slight losses in most contracts at midday. Feeder cattle futures remain slightly to moderately lower.

  • Light pressure stems from the premium nearby futures hold to the cash market.
  • Cash cattle trade last week took place mostly around $123 at all locations on Friday, which was steady with the week prior in Kansas and Texas but down in Nebraska.
  • Traders are waiting on showlist estimates before forming cash cattle expectations this week.
  • Boxed beef movement was strong coming out of the weekend with 130 loads changing hands this morning. However, this came on softer prices, as Choice cuts fell 73 cents and Select declined 88 cents this morning.
  • Feeder cattle futures are trading in line with the cash index, limiting interest in the long side of the market for the time being.

 

October lean hogs remain under light pressure, but deferred months have improved to post slight gains.

  • Steady to higher cash hog bids and strength in the product market this morning are lifting deferred contracts, while the front-month continues to see profit-taking pressure.
  • Recent and ongoing heat has tightened near-term hog supplies, which has bolstered the cash market today. Plus, the cash hog market has slightly extended its premium to nearby futures.
  • The pork market also got off to a strong start. This morning, 186.9 loads changed hands on a $1.14 gain in the pork cutout value.
  • But traders remain cognizant that the seasonal tendency is for supplies to build at this time of the year, which is limiting bullish enthusiasm today.
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