Market Snapshot, 10:00 a.m. CT -- (VIP) -- October 17, 2013

October 17, 2013 05:07 AM

Corn futures have seen two-sided trade this morning, but most contracts are currently around a penny higher.

  • Trading interest is limited as the market awaits updates on USDA data.
  • USDA canceled the October Crop Production and Supply & Demand Reports but it will release the Weekly Export Inspections Report today at 10:00 a.m. CT. (GIPSA already released some of this data.)
  • Sharp weakness in the U.S. dollar index is giving bulls a slight advantage.
  • Private consulting firm Shanghai JC Intelligence Co. says China has purchased around 1.2 MMT of U.S. corn so far this month, which is well above earlier reports.
  • A 1- to 3-cent jump in Gulf basis signals more such demand news may soon hit the market. The market may also learn of export demand as USDA begins releasing daily and weekly reports again.
  • But buying interest is being limited by ongoing harvest efforts. USDA has announced it has canceled its weekly crop progress reports for Oct. 7 and 15.

Soybean futures have extended overnight gains to trade 3 to 12 cents higher.

  • The bean market is benefiting from thoughts the reopening of the federal government could result in export demand news for the market.
  • Gulf soybean basis information is not available today, giving traders little insight as to upcoming demand news.
  • China's weekly soybean auction of state reserves attracted slightly better demand as end users bought 56.3% of soybeans put up for auction.
  • Harvest is thought to have hit or passed the halfway mark this week, signaling hedge pressure will ease. USDA will not release its progress reports for the past two weeks, however.
  • Sharp losses in the U.S. dollar index and the temporary avoidance of a U.S. debt default is also lifting the bean market.

Wheat futures have firmed to trade 8 to 9 cents higher for the SRW market while HRW and HRS futures are around 3 to 5 cents higher.

  • Weakness in the U.S. dollar index is thought to be increasing the attractiveness of U.S. wheat prices to exporters. There are also hopes the reopening of the U.S. government could yield fresh demand news that has been lacking.
  • Tempering gains is news Ukraine's ag minister says the country's winter grain losses will be less severe than originally thought at 1.24 million acres.
  • There are also concerns about the wheat crop in Argentina as the region has been dealing with both frost and dryness issues.
  • As a result, countries such as China are thought to be increasing U.S. wheat and corn buys.

Nearby live cattle futures gapped higher on the open and are enjoying moderate gains. Feeder cattle futures are moderately higher.

  • The market is responding favorably to the start of light cash cattle trade in Texas at $128 to $129 yesterday, which is steady to $1 higher compared with the week prior. A few cattle were also purchased in Kansas at $2 higher on a dressed basis. But northern feedlots held out in hopes of even higher prices.
  • The October contract now has around a $1 premium factored in relative to the upper end of last week's trade.
  • Tighter showlists have given feedlots an advantage in cash negotiations as has private data indicating the beef market is enjoying strong gains this week. Urner Barry data yesterday showed Choice cuts up 32 cents to $194.88 per cwt. and Select up 43 cents to $176.60 per hundred weight. USDA has not yet issued any updates to its boxed beef market data.
  • USDA announced it will postpone the Cattle on Feed Report that was scheduled to be released Friday, but it has not yet made a decision as to when the report will be released.
  • Sharp weakness in the U.S. dollar index and expectations the COF Report will confirm tight calf supplies are lifting feeder cattle futures.

Lean hog futures gapped higher on the open and are enjoying slight to moderate gains.

  • The technical posture of the lean hog market still favors market bulls. Sharp losses in the U.S. dollar index as the government reopens adds incentive to favor the long side.
  • Also, supplies are thought to be less readily available heading into the weekend and packers are planning a large Saturday kill. This is keeping early cash hog bids mostly steady. Packers have seen margins decline to near breakeven thanks to a mixed cash hog market of late.
  • Urner Barry reports the pork cutout value rose around 2 cents yesterday. USDA has not yet updated its pork cutout data.
  • The same can be said for the CME cash hog index, leaving traders to continue to target the October contract's expiration price of $90.62.
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