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

September 20, 2013 07:17 AM

Corn futures remain under pressure, with most contracts trading 6 to 8 cents lower.

  • Corn futures continue to trade lower in the wake of spillover pressure from soybeans, weekend position evening and reports of strong early yields from the eastern Corn Belt.
  • The recent rains that swept across the dry western Corn Belt are pressuring corn futures, as the moisture could help with kernel fill in late-planted crops. The forecast calls for the rain to move across the eastern Corn Belt, aiding crop development, and for cooler temperatures to follow into the growing region, reducing stress on the crop.
  • Adding additional pressure are reports Informa Economics now pegs the 2013 corn crop at 13.889 billion bu. with a national average yield of 157.6 bu. acre, an increase over its previous estimate. That compares to USDA's September estimate of of 13.843 billion Bu and a national average yield of 155.3 bu. per acre.
  • Gulf basis is unchanged for September and October delivery in late-morning trading following a decline of 1 cent earlier this morning for September delivery. Basis is 2 cents stronger for November delivery and a penny stronger for December delivery.


Soybean futures have trimmed early losses but remain 20 to 22 cents weaker for the November through August 2014 contracts.

  • Technical-related selling triggered by widespread rains across the dry western Corn Belt and continuing rain in the eastern Belt is weighing on bean contracts this morning.
  • This morning's decline saw futures break through the support area at the bottom of the Aug. 26 gap area. That action triggered followthrough selling and turns the previous support zone into a resistance area.
  • Traders report Informa Economics projects the 2013 soybean crop at 3.224 billion bu., larger than USDA's September estimate of 3.149 billion bushels. It also reportedly has pegged its projection of 2014 soybean crop plantings at a record 83.6 million acres.
  • The start of harvest is pressuring basis prices. Gulf basis slipped 2 cents for immediate delivery in late-morning trading following a 2-cent decline in early morning activity. Basis is unchanged for October delivery, 2 cents lower for November delivery, a penny higher for December delivery and unchanged for January delivery.


Wheat futures continue to trade 10 to 11 cents lower for SRW, 8 to 10 cents lower for HRW and 3 to 7 cents lower for HRS.

  • The mildly firmer U.S. dollar index and spillover pressure from corn futures has prices on the negative side today.
  • In addition, traders are pocketing some profits after yesterday's gains and ahead of the weekend.
  • Adding pressure is the forecast for rain in the the Southern Plains which will boost moisture reserves for new-crop seedings.
  • Reportedly, private forecaster Informa Economics has pegged the winter wheat harvest at 1.541 billion bu., about even with USDA's recent peg of 1.543 billion bushels.
  • Gulf SRW wheat basis is unchanged at midday.


Live cattle futures are mostly slightly higher and feeder cattle futures have improved to moderately higher trade.

  • Cash trading remains very limited and is expected to hold off until after the release of this afternoon's Cattle on Feed (COF) Report.
  • For perspective, sales took place at $123 on the Southern Plains last week, which is around $3 below front-month futures prices.
  • The COF report is expected to show all categories well below year-ago levels, with Placements expected to come in around 91.6% of year-ago, On Feed at 93.46% and Marketings at 95.46% of year-ago levels.
  • The boxed beef market is weaker this morning with Choice beef down 56 cents and Select 79 cents weaker. Movement is moderate at 103 loads.
  • Traders will also have a Cold Storage Report to digest Monday. Pre-report expectations are for frozen beef stocks as of Aug. 31 to decline 1.5% from the month prior to 6.8 million lbs., thanks to strong export demand. But this would still be up 5.6% from year-ago levels.
  • Feeder cattle futures are higher on weakness in corn futures and from expectations for tightening calf supply prospects.


Lean hog futures continue to post moderate losses after gapping lower on the open.

  • Traders are evening positions ahead of the weekend amid concerns the market may be working on a top.
  • If that top is confirmed, traders will shift to the sell side as they look for the seasonal decline in prices triggered by rising hog slaughter and pork production to begin.
  • Therefore, traders are not paying much attention to the widening discount the October contract holds to the cash index, which continues to rise.
  • The pork cutout value improved by 45 cents this morning but movement is a low 128.5 loads.
  • Traders are also beginning to prepare for a Cold Storage Report Monday that is expected to show frozen pork supplies at the end of August at their second highest level on record for the month at 553.3 million lbs., down 5.52% from year-ago but 12.9% above the five-year average.
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