Market Snapshot, 10:00 a.m. CT -- (VIP) -- October 21, 2013

October 21, 2013 05:03 AM

Corn futures have seen two-sided trade this morning. At present, most contracts are marginally lower.

  • Corn futures have chopped on either side of unchanged today as hedge-pressure related to harvest activity continues to weigh on the market. Also, yields continue to come in "better-than-expected."
  • USDA is expected to provide an update on harvest progress this afternoon. A Reuters poll of analysts shows they expect harvest to come in near 42% complete as of Sunday. This will be the first update since Sept. 30.
  • Light rain and snow in the forecast for Iowa and some eastern Belt states could slow harvest efforts this week.
  • The market is also factoring in Friday's post-market-close release of the weekly Export Sales Report that showed corn sales of 775,200 MT for the week ended Sept. 26, which topped expectations.
  • Gulf basis fell 2 cents for 2013 delivery this morning, though basis was steady to a penny higher for January and February delivery.
  • Strength in the U.S. dollar index is also encouraging bouts of profit-taking.

Soybean futures are back near the top of their daily trading range with most contracts 4 to 6 cents higher.

  • Ideas USDA this afternoon will confirm harvest has moved past half complete, indicating the easing of hedge pressure is lifting the bean market today. Pre-report expectations are for the agency to show harvest is 62% complete.
  • Also, USDA this morning announced a 235,000 MT soybean sale to unknown destinations for 2013-14 delivery.
  • This follows news of strong export sales the week ended Sept. 26 of 860,700 MT for 2013-14 and 43,000 MT for 2014-15 delivery. And this preceded the government shutdown, during which exporters may have taken advantage of the reporting "black out" to book needs.
  • The market is brushing off official customs data showing a 5.4% decline from year-ago in Chinese soybean imports for September to 4.7 MMT.

After favoring the upside overnight, wheat futures have softened to post losses around 7 to 10 cents for all three flavors.

  • Wheat futures are facing profit-taking after the SRW market briefly penetrated resistance at the July high.
  • Also adding pressure, weekend rains in Kansas and Oklahoma are thought to be helping with winter wheat crop establishment.
  • Fresh export demand news for U.S. wheat has been lacking. This must return for the wheat market to find active buying interest.
  • On Friday, USDA reported wheat export sales for the week ended Sept. 26 of 837,800 MT, topping expectations. But the impact of this news is being tempered by the delayed nature of it.
  • Gulf SRW wheat basis is steady to a penny lower this morning.

Live cattle futures opened under pressure, but this has given way to some light bargain buying. The market is favoring the upside in mixed trade. Feeder cattle futures are slightly to moderately higher in most contracts.

  • Cash cattle trade took place between $129 and $131 last week, but the higher prices spurred a selloff amid concerns lofty prices are not sustainable. This pulled packer profit margins deeper into the red.
  • But the late-week selloff in futures brought the front-month in line with the cash market, while December futures are at around a $1 premium to the upper end of last week's trade, signaling still-friendly cash market expectations.
  • Traders will await boxed beef market updates and showlist estimates before forming cash opinions for this week. On Friday, Choice boxed beef cuts firmed 26 cents, while Select fell $1.74. Movement was a light 152 loads.
  • Traders in the feeder cattle market are oscillating between profit-taking amid strength in the corn market and the buying amid speculation the rally in feeders could continue.

Lean hog futures are posting slight losses this morning.

  • Expectations building hog supplies will outpace an uptick in hog slaughter numbers are pressuring lean hogs to start the week.
  • Average hog weights in Iowa and southern Minnesota rose 2.7 lbs. in the week ended Oct. 12.
  • And a $1.53 decline in the pork cutout value Friday diminished packer profit margins to near breakeven.
  • As a result, steady to lower cash hog bids are expected to start the week. Supplies are said to be readily available.
  • But losses are being limited by Friday's data that showed weekly pork export sales surged to 21,800 MT the week ended Sept. 26.
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