Market Snapshot, 10:00 a.m. CT -- (VIP) -- October 11, 2013

October 11, 2013 05:01 AM

Corn futures are around 4 to 5 cents lower this morning.

  • Corn futures are seeing followthrough selling this morning as news of EPA's proposal to lower the corn ethanol component of the Renewable Fuels Standard for 2014 continues to roil the market. One plan in an EPA proposal would set the corn-based portion at 12.36 billion gallons while a third option would put it at 13.18 billion gallons.
  • The market is also seeing some technical selling pressure as corn contracts are working on new weekly lows.
  • There is also disappointment that USDA will not release its October Crop Production and Supply & Demand Report this morning due to the government shutdown. Traders were expecting a slight reduction in the size of the crop.
  • But a 1-cent uptick in Gulf basis for December delivery this morning reminds that exporters may be taking advantage of the price break and the government shutdown by upping their corn buys without the market's knowledge.
  • South Korea rejected all offers on its tender for 55,000 MT of food-quality corn from the U.S. or South America, citing high prices.

Soybean futures are posting double-digit losses through the August contract this morning, with the front-month down 18 cents.

  • Soybeans have extended overnight losses, as nearby contracts appear headed for a test of at least the October lows. This is encouraging technical-based sales ahead of the weekend.
  • Meanwhile, harvest is underway, which is adding hedge-related pressure to the market. The weather was favorable for active progress this week, but traders are unlikely to receive an update on this Monday due to the ongoing government shutdown.
  • Rains could push farmers out of the fields this weekend and early next week, however.
  • Traders are disappointed that USDA will not release its October crop reports. They expected the report to show a slight uptick in the size of the soybean crop from last month.

Wheat futures are mixed with nearby contracts of all three flavors steady to 2 cents higher.

  • Wheat futures are seeing light support to wrap up the week as crop concerns in the Black Sea region and improved demand for U.S. wheat remain close at hand.
  • But losses in the corn and soybean markets as well as limited export data from USDA this week are limiting buying interest to short-covering.
  • Overnight news surfaced that some private firms have trimmed their Russian crop estimates, which raises expectations that U.S. will garner a larger share of global wheat business in the year ahead.
  • Japan bought 101,892 MT of milling wheat, including 38,939 MT of U.S. wheat, according to the country's ag ministry.
  • But traders remain cautious about adding to long positions after Egypt canceled its wheat tender yesterday because of high prices.

Live cattle futures are posting slight gains this morning, while feeder cattle futures are moderately to sharply higher.

  • Around 11,000 head have reportedly changed hands in Kansas at around $127 to $128.
  • But active cash cattle trade has yet to begin in other locations. The fact that traders are extending nearby contracts' premium to last week's cash action at $126 signals friendly expectations. Packers have raised bids to $124.
  • Showlist estimates are tighter in all locations except Nebraska this week, but packers are dealing with negative margins.
  • Light support also comes from a slight uptick in Choice boxed beef values yesterday, according to Urner Barry.
  • The cattle market and especially feeder cattle continue to benefit from massive herd destruction estimated between 50,000 and 70,000 head in death loss following last weekend's snowstorm in South Dakota. Softer corn prices are also lifting feeder cattle.
  • But buying interest is being tempered by some export demand concerns. According to a notice issued by USDA's Food Safety and Inspection Service, the Cactus, Texas, Swift Beef Co. plant is not eligible to ship beef to South Korea. Earlier this week, it was reported that 22 MT shipment of beef to South Korea that was found to contain traces of Zilmax originated from a Colorado Swift Beef plant.

Lean hog futures are narrowly mixed this morning, with nearbys firmer and 2014 contracts under pressure.

  • Nearby contracts are seeing light short-covering amid ideas the downside was overdone yesterday.
  • But otherwise, the lack of official USDA data on the hog and product market is limiting trading interest to position evening.
  • There is also some unease about how the new settlement process will play out for October lean hog contract Monday.
  • Data from Urner Berry signals pork cutout values were little changed yesterday, but for the week it has declined sharply.
  • Declines in the product market have outpaced those of the cash market this week, tightening packer profit margins. Nevertheless, packers are panning a large Saturday kill.
  • Expanding supplies are being met by increasing processing demand, resulting in steady cash hog bids thus far today.
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