Market Snapshot, 10:00 a.m. CT -- (VIP) -- November 7, 2013

November 7, 2013 04:00 AM

Corn futures are posting gains of 2 to 3 cents this morning.

  • Signs of rebuilding corn demand are giving the corn market a slight lift today, but interest in adding long or short positions remains on hold preceding USDA's Friday reports.
  • The surge in the U.S. dollar index on better-than-expected GDP growth for the third quarter is also countering signs of strong demand.
  • Weekly export sales of 1.719 MMT for 2013-14 came in well above lofty expectations, signaling exporters see prices as a value. Export commitments for 2013-14 are running 101% ahead of year-ago levels, whereas USDA projects exports will be up 66.7% over the year prior. This signals there should be some upside on USDA's export forecast.
  • Traders expect USDA to peg the U.S. corn crop around 14.022 billion bu. on a national average yield of 159.43 bu. per acre tomorrow. They expect carryover to climb to around 2.056 billion bushels.

Soybean futures have improved to trade fractionally to 8 cents higher through the March contract and mixed in deferred months.

  • Traders in the soybean market were again reminded of strong soybean demand today with both the weekly export sales report and a daily sales announcement.
  • Weekly soybean sales of more than 1.018 MMT for 2013-14 and 18,700 MT for 2014-15 came in near the upper end of pre-report expectations. Soymeal and soyoil sales topped expectations the week ended Oct. 31.
  • Soybean export commitments for 2013-14 are now running 28% ahead of last year's pace. USDA projects exports to be up just 4.2% from year-ago, signaling USDA may raise its export projection Friday.
  • USDA also announced China bought 250,000 MT of soybeans for 2013-14 delivery this morning.
  • But countering this are expectations tomorrow's crop reports will show USDA raising its production estimate by around 76 million bu. to 3.225 billion bushels. They also expect carryover to rise by around 33 million bu. to 183 million bushels.

Wheat futures are mostly slightly higher in the SRW market, while HRW and HRS wheat futures are choppy with nearbys favoring the downside.

  • Spillover from the corn and soybean markets are lifting SRW wheat futures this morning. Gains are impressive considering technical damage the market has sustained of late and marked strength in the U.S. dollar index.
  • This morning's export sales report revealed wheat sales of 416,800 MT for 2013-14 and 11,000 MT for 2014-15, which was in line with expectations. But that unimpressive tally will keep wheat demand concerns close at hand.
  • Traders are not overly concerned about frost and freeze warnings in the Southern Plains today as the winter wheat crop is off to a strong start.
  • Traders are also focused on evening positions ahead of tomorrow's USDA reports. They expect USDA to trim wheat carryover to around 527 million bushels.

Live and feeder cattle futures are posting slight losses this morning.

  • Marked strength in the U.S. dollar index is encouraging some profit-taking in both live and feeder cattle futures as traders wait for cash cattle trade to begin. Dollar strength comes on stronger-than-expected U.S. GDP growth of 2.8% for the third quarter.
  • Showlist estimates are up this week and while boxed beef prices remain historically high, this has come at the expense of movement. Also, price action in the product market has been choppy this week.
  • Adding pressure is news of an 18,500 MT net sales reduction for 2013 in this morning's weekly export sales report. This adds export demand concerns to existing concerns about domestic demand.
  • However, overall supply tightness is expected to keep the cash and futures markets supported through 2014.
  • Late week cash trade is likely as bid and asking prices remain $4 apart. Last week, trade took place at mostly $132 on the Southern Plains with some sales at $133.
  • Strength in the corn market is adding to pressure on feeder cattle futures. The November contract is in line with the cash index, limiting both buying and selling interest.

Lean hog futures are slightly lower this morning.

  • Lean hog futures are seeing followthrough sales today. The market has given strong signals it has put in a top this week. The surge in the U.S. dollar index adds incentive for traders to exit long positions.
  • Supplies are building seasonally and packers are having no trouble booking needs. Thus, the cash hog market is steady to lower today.
  • Packers are still enjoying wide profit-margins, which is giving them incentive to ramp up slaughter runs. Yesterday's kill was the largest of the year, according to Urner Barry.
  • The pork cutout value fell 50 cents yesterday, but this caused movement to surge to 508.21 loads.
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