Market Snapshot, Noon CT (VIP) -- August 20, 2013

August 20, 2013 07:00 AM
 

Selling has picked up again in the corn market, with futures mostly 7 to 8 cents lower ahead of midday.

  • Following yesterday's gains, corn is vulnerable to profit-taking.
  • Traders are also digesting Day 1 results from the Pro Farmer Midwest Crop Tour for Ohio and South Dakota.
  • Samples in Ohio pointed to a corn yield of 171.64 bu. per acre, which is a strong gain from the three-year average of 144.12 bu. per acre.
  • South Dakota samples resulted in a corn yield estimate of 161.75 bu. per acre, which is also up sharply from the three-year average of 119.65 bu. per acre.
  • But scouts did note building dryness in both states as well as maturity concerns for the South Dakota crop that could draw down yields heading into harvest.
  • Pressure is being limited by a larger-than-expected decline in the condition of the corn crop in yesterday's report. USDA now pegs 61% of the corn crop in "good" to "excellent" condition. On Pro Farmer's weighted Crop Condition Index this translated to a 5-point decline to 361 on our 0 to 500 (perfect) scale.

 

Soybean futures have turned mixed, with nearbys 7 to 8 cents lower and deferreds favoring a firmer tone.

  • Nearby bean futures are seeing profit-taking due to ideas yesterday's gains were overdone, although the short-term trend remains decidedly higher.
  • Traders are also digesting Day 1 results from the Pro Farmer Midwest Crop Tour that revealed Ohio soybean pod counts in a 3'x3' square of 1,283.61, which compares to the three-year average of 1,162.64. South Dakota soybean pod counts in a 3'x3' square totaled 1,016.68, which compares to the three-year average of 984.62 pods.
  • But scouts did take note of dryness and the need for rain in these states to realize full yield potential. Heat in the forecast is not conducive to this end, but above-normal precip is forecast for both of these states in the 6- to 10-day outlook.
  • Meanwhile, building warmth and dryness across the Corn Belt raises expectations the crop will continue to deteriorate this week.
  • Our weighted Crop Condition Index showed the crop declined by 3.6 points from last week to 358.6 on our scale (0 to 500 being perfect).
  • Gulf soybean basis fell 1 to 6 cents for October and September delivery, signaling yesterday's gains encouraged some farmer selling.

 

Wheat futures are marginally to 1 cent lower across all flavors.

  • With a lack of fresh news for the market to digest, wheat remains in a follower's role to neighboring corn and soybean markets.
  • But spillover pressure from corn and beans has been minimal on ideas the downside is overdone in the wheat market.
  • Minneapolis wheat futures have seen buying at times due to concerns about the lagging harvest pace. Yesterday's USDA data showed harvest advanced to 18% complete as of Sunday, which is 20 percentage points behind the five-year average pace.
  • Weakness in the U.S. dollar index is also limiting pressure, as it makes U.S. wheat more competitive globally, although wheat needs fresh demand news.

 

Live cattle futures remain mixed, with nearbys firmer and deferreds mixed amid spreading.

  • Nearby live cattle continue with a firmer tone thanks to tightening market-ready supplies, while deferred futures are weaker, but off session lows.
  • Traders believe a seasonal rally in the cattle market is underway as supplies will likely continue to tighten through fall while beef demand typically remains strong.
  • Lackluster beef demand continues to limit bullish enthusiasm, as just 84 loads of cuts have changed hands this morning. Choice values are up 30 cents and Select is down 30 cents this morning.
  • Weakness in the U.S. dollar index is also supportive this morning.
  • Feeder cattle futures are benefiting from softer corn prices.

 

Lean hog futures have turned mixed after a mostly firmer start to the day.

  • While supplies are building seasonally, the sharp discount October lean hog futures already hold to the cash index is resulting in some light short-covering for nearby futures.
  • Sharp losses in the U.S. dollar index are also supportive.
  • Most plants are well supplied for the week, which is keeping cash hog bids steady to lower today, despite solid packer profit margins.
  • Plus, Labor Day buying is largely wrapped up.
  • Following yesterday's sharp decline, pork cutout values have dropped another 76 cents this morning on decent movement of 217.9 loads.
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