Market Snapshot, 10:00 a.m. CT -- (VIP) -- September 27, 2013

September 27, 2013 05:03 AM

Corn futures have chopped on either side of unchanged this morning. At present, most contracts are fractionally lower.

  • The corn market faced light pressure on the open, but gains in the wheat market have lifted the market into positive territory at times.
  • Warm, dry Midwest conditions are thought to have encouraged an uptick in harvest activity this week, which has weighed on basis and remained a drag on futures buying interest. This will likely remain the case until harvest moves past half complete.
  • But improved export demand for lower-priced corn has helped support basis levels at the Gulf and limited selling interest in the corn market this week.
  • Traders are also working to ready positions for Monday's Quarterly Grain Stocks Reports. Pre-report expectations are for USDA to peg Sept. 1 corn stocks around 688 million bu., but past reports have surprised the market and led to limit moves (often to the downside), which keeps traders cautious.
  • A weaker U.S. dollar index on disappointing consumer sentiment data is also helping to limit selling interest.

Soybean futures are steady to 5 cents higher with nearbys leading the rally.

  • Soybeans are enjoying some corrective short-covering today as traders view the downside as overdone considering expectations for still-tight carryover levels and continued export demand strength.
  • Weakness in the U.S. dollar index is encouraging to that end.
  • The market expects USDA to set 2013-14 carry-in at 126 million bu. on Monday, which compares to 169 million bu. last year. If this is realized, this signals price rationing will be necessary this marketing year.
  • But buying interest outside of short-covering remains limited by early harvest activity, which has pressured basis at interior locations this week.
  • Light support also stems from reports farmers in Argentina are selling beans for export at a slower pace than last year as a hedge against inflation.

Wheat futures are mixed with an upside bias in the SRW market, while HRW wheat is 1 to 3 cents higher and HRS wheat is posting gains of 2 to 7 cents.

  • A daily sales announcement and weakness in the U.S. dollar index are keeping strong wheat demand in focus again today.
  • This morning, USDA announced a 121,600-MT wheat sale to an unknown destination for 2013-14. Of the total, 55,000 MT is HRW, 38,800 MT is soft white and 27,800 MT is HRS.
  • News that Ukraine could see a sharp drop in winter wheat acreage due to excessive wetness across the country is also a supportive factor this morning. Also, the head of Russia's Grain Union says the Russian 2013 grain crop will fall short of the ag ministry's target of 90 MMT.
  • The market is also still digesting reports of high yields but low-quality wheat as harvest nears complete in Western Canada.
  • The market has also given some technical signals it may have put in a low, though bulls will face several layers of tough resistance before this is confirmed.

Live cattle futures got off to a firmer start, but the market has since softened to mixed trade. Feeder cattle futures are posting slight losses.

  • Traders in the live cattle market are evening positions as they wait for cash cattle trade to begin.
  • Steady to firmer trade compared with last week's $124 action on the Southern Plains is anticipated, but futures already have nearly a $4 premium factored into prices, opening the door for some light profit-taking.
  • Showlist estimates are down in all locations except Texas this week and bids are already at $123 in the South.
  • Boxed beef price action has been choppy this week and yesterday, but movement has been solid for the most part. Packers have seen profit margins dip into the red.
  • Strength in the corn market is encouraging light profit-taking in the feeder cattle market today, though tight calf supplies remain an underlying source of support.

Lean hog futures are enjoying slight gains in most contracts. The front month is the exception as it is slightly lower.

  • Traders are favoring the upside as they ready positions for this afternoon's Quarterly Hogs & Pigs Report, which is expected to show All Hogs & Pigs at 98.6% of year-ago levels.
  • Packers are enjoying wide profit margins, but variable demand after some plants reduced kill hours is keeping the cash hog market steady to lower today.
  • The cash hog index has declined the past few days, narrowing the discount the front-month holds to the index to less than $5.
  • The pork cutout value firmed 81 cents yesterday, though movement slowed to 285.79 loads.
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