Market Snapshot, Noon CT (VIP) -- September 24, 2013

September 24, 2013 06:59 AM
 

Corn futures are posting losses of 4 to 5 cents.

  • The re-establishment of long soybean/short corn spreads has corn facing light selling pressure this morning.
  • In addition, the weather forecast favors the startup of harvest and the normal weakening in basis that occurs. USDA yesterday reported that harvest was 7% complete as of Sunday. Interior points continue to report decreases in basis from Indiana to Nebraska.
  • Adding some initial selling pressure was the surprise from USDA's boost in the amount of corn rated "good" to "excellent" by 2 percentage points to 55% Monday afternoon. That increase translated into a 2-point improvement on Pro Farmer's weighted Crop Condition Index (0 to 500 point scale) to 344.
  • Selling interest is being somewhat limited by signs prices are rebuilding demand. Columbia bought 180,000 MT of 2013-14 corn this morning.
  • Gulf corn basis is 2 cents firmer for immediate delivery in late-morning trading and unchanged for all other delivery periods.

 

Soybean futures continue to post gains of 4 to 8 cents.

  • Short-covering and re-establishment of long soybeans/short corn spreads are lifting soybean futures.
  • Traders were also initially surprised that USDA left its "good" to "excellent" rating for the bean crop unchanged at 50%. Traders had expected a slight improvement in ratings.
  • Our weighted Crop Condition Index (0 to 500 point scale) shows the soybean crop firmed 1 point to 335 last week.
  • USDA also reported harvest was 3% complete as of Sunday, which compares to 9% complete at this time for the five-year average. Traders expect basis to weaken with the startup of harvest, which means rallies will likely be limited to short-covering. Interior points from Indiana to Nebraska reported declines in basis levels this morning, limiting buying.
  • The damage done to charts in recent days is substantial and puts even more resistance on bulls to rally prices.
  • Gulf soybean basis is unchanged in late-morning trading.

 

SRW, HRW and HRS wheat futures are sporting gains after the SRW and HRW markets started the day under pressure.

  • Wheat futures have moved to the plus side on news Argentina's wheat crop was hit with frost last night.
  • The country's wheat crop was already suffering under very dry growing conditions.
  • The forecast for rain in winter wheat country initially put light pressure on the SRW and HRW markets.
  • USDA data yesterday indicated that winter wheat planting is 23% complete, which is just one percentage point below the five-year average.
  • The report also showed spring wheat harvest is in line with the five-year average pace at 93% complete as of Sunday.
  • Gulf SRW basis is unchanged in late-morning trading.

 

Live cattle futures are posting slight to moderate gains in most contracts, while feeder cattle futures are moderately higher.

  • Live cattle futures are higher in positive reaction to yesterday's Cold Storage Report, gains in wholesale beef prices and early indications higher cash cattle trade may take place this week.
  • Tightening supplies confirmed by last week's Cattle on Feed Report remain in traders' minds.
  • The boxed beef market is sporting higher prices this morning but movement is very slow. Choice beef is 27 cents higher and Select beef is 76 cents stronger but only 55 loads have changed hands.
  • Also, yesterday's Cold Storage Report came in well below expectations as frozen beef stocks for the end of August were down 6.2% from the previous month.
  • In addition, showlist estimates are down everywhere except Texas this week, setting the stage for firmer cash cattle trade again this week if the product market remains strong.
  • However the $3 premium the October futures carry versus last week's cash action at mostly $124 is keeping buying interest in check.
  • Weakness in the corn market and tight calf supplies are lifting feeder cattle futures.

 

Lean hog futures have extended sharp early gains after gapping higher on the open.

  • News Smithfield Foods shareholders approved Shuanghui International's purchase of the company -- the final barrier to the deal -- is lifting the market as traders expect this to expand export opportunities to China.
  • Futures are also getting a lift from yesterday's Cold Storage Report, which showed frozen pork stocks well below year-ago and down 0.7% from the month prior and 7.8% below year-ago levels.
  • Traders are also attempting to narrow the discount between October futures and the cash hog index, which today's action has narrowed to $5.
  • The gap higher opening in futures has lifted to futures to new contract highs.
  • But cash hog bids are steady to lower today despite wide packer profit margins.
  • The pork cutout value rose 76 cents again this morning and movement improved to 184.25 loads.
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