Market Snapshot, Noon CT (VIP) -- September 11, 2013

September 11, 2013 07:02 AM

Corn futures are choppy with a slightly weaker bias in light pre-report trade.

  • Thin, choppy trade continues ahead of Thursday's Crop Production and Supply & Demand Reports from USDA.
  • For Thursday's reports, traders look for USDA to lower its national average yield estimate to 153.9 bu. per acre for a 13.646-billion-bu. crop, down 117 million bu. from August and for USDA to cut its 2013-14 corn carryover peg by 140 million bu. from last month to 1.697 billion bushels.
  • The weather forecast says cooler temperatures are ahead for the Midwest, but precipitation probabilities remain low, which suggests crops will continue to finish poorly. But traders seem to feel the unfavorable forecast is factored into prices.
  • The market found light support from reports U.S. weekly ethanol output rose 29,000 barrels per day (bpd) to 848,000 bpd. But, U.S. weekly ethanol stocks rose 53,000 barrels to 16.27 million barrels.
  • A Taiwanese trade delegation on Tuesday signed non-binding letters of intent to buy 5 MMT of U.S. corn and 500,000 MT of U.S. distillers dried grains (DDGs) over the next two years.
  • News out of China that country expects its corn crop will be record-large at 215 MMT, up 4.6% from year-ago is seen as a negative.
  • Also adding some pressure is news Ukraine's agriculture ministry has raised its forecast for the country's 2013 corn harvest to an all-time-high of 29 MMT to 30 MMT from the previous estimate of 26 MMT.
  • Interior corn basis weakened again as harvest nears, adding selling pressure to futures. Some points in Iowa report declines of 10 to 25 cents for immediate delivery. However, Gulf basis bids firmed 1 to 3 cents in early trading this morning and remained unchanged in late-morning trade except for the November delivery period, which saw basis firm by 1 cent.


Soybean futures are steady to 4 cents higher for new-crop contracts.

  • Soybean futures are slightly higher as traders continue to square positions ahead of Thursday's monthly crop reports from USDA.
  • Traders are keeping an eye on the weather, which does call for a cooling in temperatures across the Midwest and slight chances of isolated showers. But forecasts still indicate temperatures will remain above normal and precipitation levels will be below normal.
  • Pre-report expectations for USDA's reports on Thursday point to a national average yield of 41.3 bu. per acre for a 3.149-billion-bu. crop, down 106 million bu. from last month and for USDA to trim 2013-14 carryover to 161 million bu., down from 220 million bu. last month as a result of the smaller crop estimate.
  • Gulf basis is 5 cents weaker for immediate delivery, unchanged for last-half September delivery, 2 cents weaker for October delivery and unchanged for November through January delivery.


Wheat futures are choppy with SRW and HRS mildly favoring the upside and HRW wheat evenly mixed.

  • With little direction from corn and soybean futures, wheat futures marking a choppy day.
  • Traders continue to position themselves ahead of Thursday's reports. Traders look for USDA to raise carryover by around 5 million bu. from last month to 556 million bushels. Report data for corn could be the larger driver of post-report action for the wheat market.
  • Traders are shrugging off news USDA reported a sale of 120,000 MT of HRW wheat to Nigeria. In addition, South Korea purchased 23,000 MT of U.S. wheat overnight.
  • Gulf basis for SRW wheat is unchanged in late-morning trading after starting stronger in early morning. Basis is unchanged for September delivery but a dime stronger for October delivery. It is unchanged for November through January delivery.


Live cattle and feeder cattle futures continue to trade slightly higher.

  • Live cattle futures are slightly higher on light short-covering as traders wait on cash cattle trade to develop.
  • Traders continue to look for cash prices to trend higher this fall and believe prices may be bottoming currently.
  • Traders got some positive news on the wholesale beef front this morning to support their view. USDA reports Choice boxed beef rose 15 cents and Select rose a penny. More importantly, movement improved to 156 loads.
  • But feedlots may have to wait to see higher cash prices as showlists are up this week.
  • A lack of buying interest in corn is helping support feeder cattle futures.


Lean hog futures continue to trade lower with October futures leading mild price declines.

  • Light profit-taking continues following recent strong gains.
  • Meanwhile, cash hogs are steady to firmer as stronger pork cutout values boost packer margins and packers work to fill slaughter runs.
  • The pork cutout value rose again this morning, offering support for futures. It firmed 52 cents, USDA reports, and movement is a hefty 273.2 loads.
  • With forecasts calling for cooler temperatures, traders look for weights and hog runs to rise.
  • However, traders are reluctant to press October futures sharply lower as the cash hog index has edged higher again putting October lean hog futures at nearly a $2 discount to the index.
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