Market Snapshot, Noon CT (VIP) -- September 12, 2013

September 12, 2013 07:20 AM
 

Corn futures are 7 to 10 cents lower in the December 2013 through December 2014 contracts as the trade reacts negatively to today's USDA reports.

  • Traders increased selling immediately following the release of the USDA Crop Production and Supply & Demand Reports which disappointed bullish expectations.
  • December futures penetrated support at the September low of $4.57, but the contract bounced off that level.
  • Traders expected USDA to reduce the national average yield to 153.9 bu. per acre, but USDA lifted the average to 155.3 bu. per acre instead, an increase over its August estimate of 154.4.
  • The higher average yield results in a higher total production estimate of 13.843 billion bu. versus 13.763 billion bu. in August.
  • Carryover estimates were increased as well to 1.855 billion bu. for 2013-14 while the traded expected it to be trimmed by 140 million bu. from August to 1.697 billion bushels.
  • Weekly corn export sales of 332,600 MT for 2013-14 and a net sales reduction of 59,400 MT for 2012-13 fell short of expectations. But a total of 876,100 MT were carried over from the 2012-13 season.
  • Gulf basis is 2 cents higher for September delivery, a penny higher for October delivery and unchanged for other months in late trading this morning.

 

Soybean futures are enjoying gains in the teens to 20s through the May contract.

  • Traders reacted positively to USDA's Crop Production and Supply & Demand Reports which showed lower 2013-14 supplies than the trade expected. But the selloff in corn futures is trimming the gains in soybeans.
  • USDA's crop estimates came in about as the trade expected with a total crop of 3.149 billion bu. and a national average yield of 41.2 bu. per acre. USDA also dropped its 2013-2014 carryover projection to 150 million bu., below trader expectations.
  • Earlier, the market saw light pressure from the disappointing soybean export sales of 478,100 MT for 2013-14 the week ended Sept. 5. A total of 928,500 MT were carried over from the previous marketing year.
  • Gulf basis is a penny lower for last-half September delivery and unchanged for later delivery periods in late-morning trading.

 

All flavors of wheat futures are down today with the SRW down 3 to 6 cents, HRW down 2 to 5 cents and HRS down fractionally to 2 cents lower.

  • Wheat futures are lower in reaction to the selloff to corn futures.
  • Additional pressure is coming from USDA's increase of global wheat supply projections.
  • This morning's Weekly Export Sales Report has spurred limited reaction as sales of 543,900 MT for 2013-14 and 8,000 MT for 2014-15 met expectations.
  • Earlier today the market saw selling on news Strategie Grains raised its peg of the EU's 2013-14 soft wheat harvest by 1.3 MMT to 135.5 MMT due to higher acreage.
  • The selloff in corn futures has removed trader focus from the severe drought which is well entrenched across western Kansas, although recent rains have provided some relief.
  • Gulf SRW Gulf basis is unchanged in late-morning trading with the exception of January delivery which is 4 cents stronger.

 

Live cattle futures are mixed at midday, while feeder cattle futures are moderately higher.

  • The selloff in corn futures due to larger supply projection from USDA has encouraged light buying in live cattle futures and even stronger gains in feeder cattle futures.
  • Additionally, in this morning's reports, USDA left its cash steer price projections unchanged at an average of $124.50 for 2013 and $131 for 2014.
  • Strong beef movement yesterday and relatively moderate movement this morning has traders hopeful the seasonal upswing in both cash cattle and boxed beef will begin soon.
  • But Choice boxed beef is down 7 cents this morning with Select beef down 79 cents. Movement is strong at 131 loads, however.
  • Beef export demand also remains strong. Movement rose 1,000 MT from last week's strong tally to 18,900 MT.

 

Lean hog futures are moderately higher at midday.

  • The selloff in corn futures is lifting lean hog futures as traders factor in declining feed costs.
  • While the pork product market had been moving higher in a counter-seasonal trend, the pork cutout value weakened this morning, raising trader concerns the seasonal downturn in both cash hog and wholesale prices is about to begin.
  • The pork cutout value fell $1.38 this morning with movement of 176.1 loads.
  • The cash hog market continues steady to higher as recent Midwest heat has tightened near-term supplies.
  • In its reports this morning, USDA left its 2013 and 2014 cash hog price projections unchanged. It pegs this year's average cash hog price at $63 and the 2014 price at $60.
  • Pork export sales rose 2,700 MT to 7,300 MT the week ended Sept. 5.
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