Market Snapshot, Noon CT (VIP) -- September 23, 2013

September 23, 2013 07:07 AM

Corn futures are fractionally higher at midday.

  • Light short-covering continues to lift corn futures this morning as some traders feel the downside was overdone last week. In addition, corn futures continue to benefit from spread unwinding with soybeans.
  • USDA's announcement of a 197,200-MT corn sale to Mexico for 2013-14 this morning is also providing light support as it suggests that lower prices are rebuilding demand.
  • The market is getting no direction from today's export inspections report from USDA, which pegs total inspections at 17.916 million bu., down roughly 2.3 million bu. from last week and within traders' expectations.
  • Traders expect USDA to report 11% of the nation's corn crop has been harvested through Sunday. That compares to 4% harvested reported last week and 39% harvested a year ago.
  • Traders are reluctant to build long positions in corn futures with harvest starting across the Corn Belt and harvest active across southern growing regions.
  • Gulf basis is adding pressure, with basis for September delivery dropping 9 cents at midday. Basis is down 2 cents for October delivery, down 1 cent for November delivery and unchanged form December and January delivery.


Soybean futures are 5 to 8 cents lower through the July contract, while deferred contracts are slightly higher.

  • Traders are voicing concerns the downside has been overdone considering strong export demand. But with harvest just starting, upside potential remains limited to bouts of short-covering.
  • The market is ignoring today's export inspections report from USDA, which shows 16.793 million bu. being inspected. That figure is four times higher than the top end of traders' expectations.
  • Traders expect USDA to report a one percentage point improvement in the percentage of soybeans rated "good" to "excellent" in this afternoon's crop condition update. They look for 51% of the nation's crop to be rated "good" to "excellent" now following last week's rain. Last year 35% of the nation's soybeans managed a "good" to "excellent" rating.
  • Traders expect USDA to report 3% of the nation's soybean crop is harvested as of Sunday. That compares to 22% harvested a year ago.
  • An uptick in China's flash HSBC purchasing managers' index to a six-month high of 51.2 signals ongoing improvement with the country's economy, which should translate to continued strong soy imports.
  • Basis levels are softening at interior locations in anticipation of the start of harvest. But basis at the Gulf firmed 1 to 2 cents in late-morning trade for September through November delivery. Basis levels remained unchanged for December and January delivery.


SRW wheat futures are 5 to 7 cents higher; HRW wheat futures are mostly 2 to 3 cents stronger; HRS wheat is 1 to 3 cents higher.

  • Wheat futures are gaining some spillover support from the slightly higher corn futures.
  • Traders are also becoming somewhat more positive about demand for U.S. wheat.
  • Today's export inspections report from USDA adds more fodder to their thinking. It shows strong export movement at 42.319 million bushels. The total came in at the upper end of trader expectations.
  • The China National Grains and Oils Information Center says the county will import 7.5 MMT of wheat in 2013-14, up 1 MMT from its previous forecast. USDA projects 2013-14 Chinese wheat imports at 9.5 MMT.
  • Light support also comes from news Kazakhstan's grain exports from July 1 to Sept. 20 fell to 1.39 MMT from 1.87 MMT during the same period last year, according to its ag ministry.
  • Gulf SRW basis remains unchanged in late-morning trade with the exception of the December delivery period, which is 5 cents stronger.


Live cattle futures gapped higher on the open and futures are continue to post slight to moderate gains. Feeder cattle are slightly to sharply higher.

  • Cattle futures continue to gain from the bullish Cattle on Feed (COF) Report, which reflected greater-than-expected tightening of supplies and the possibility cow-calf operators are holding back heifers for breeding purposes.
  • In addition, futures are gaining some support from a firmer cash market. Cash cattle in Texas and Kansas traded at mostly $124 on Friday, up $1 from the bulk of trade the week prior. In Nebraska, cash trade took place at $124 to $125, which was up 50 cents to $1.50 from the week prior.
  • The boxed beef trade is also providing support. USDA reports Choice beef is 70 cents stronger and Select beef is 49 cents higher. Movement is a decent 107 loads.
  • October futures continue to trade at more than a $2 premium to last week's cash action, which is limiting gains.
  • Feeder cattle are being supported by the strength in live cattle.


Lean hog futures are slightly higher.

  • Spillover strength from live cattle futures and the deep discount of futures to the cash index are lifting hog futures.
  • Traders are reluctant to sell in the face of an $8 discount between the October lean hog contract and the cash hog index.
  • Cash hog bids are mixed today amid varied demand. Packers are again enjoying solid cutting margins, but have reduced kill lines due to the surprising reduction in supplies.
  • Traders continue to look for hog numbers to rise seasonally along with the cooler temperatures.
  • Some selling pressure is coming from today's pork cutout value, which is down 52 cents today. Movement is a moderate 165.87 loads.
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