Market Snapshot, 10:00 a.m. CT -- (VIP) -- October 31, 2013

October 31, 2013 05:08 AM
 

Corn futures have seen trade on either side of unchanged this morning, but most contracts are currently a penny higher.

  • The corn market has seen limited reaction to weekly export sales data showing MUCH stronger than anticipated corn sales of 4.556 MMT for 2013-14 and 738,000 MT for 2014-15 delivery. Traders had anticipated sales between 1.8 MMT and 3 MMT.
  • USDA also noted that for the week ending Oct. 17, 2013, corn sales for Mexico (1.569 MMT) and unknown destinations (304,800 MT) for delivery during the 2013-14 marketing year would have been reported as daily sales if the government had been open.
  • USDA also announced a 123,040-MT corn sale to Japan and a 174,000-MT corn sale to South Korea for 2013-14 delivery this morning.
  • Gulf basis ticked up a penny for all 2013 delivery months this morning.
  • All of this indicates exporters see prices as a value. But market reaction (or rather the lack thereof) signals traders are not concerned thanks to expectations for a record-large crop.
  • Rain is still falling in some areas of the Midwest and another active front is expected to move into the Corn Belt next week, slowing harvest efforts. Traders are displaying little concerns about the potential for more harvest delays.

Soybean futures are posting fractional to 2-cent losses this morning.

  • Action in the market signals traders were not "surprised" by soybean export sales that surpassed the upper end of the pre-report guess range by more than 1.7 MMT for Oct. 3-24.
  • Export sales of 4.742 MMT for 2013-14 delivery signals exporters took advantage of the break in the U.S. dollar and the government shutdown by actively booking needs. China accounted for 2.112 MMT of the purchases. Exports in excess of 5.123 MMT also impressed, with China receiving 3.821 MMT of the business.
  • Attitudes are bearish as much uncertainty exists about the state of this year's crop.
  • Adding to market caution is an increase in planting in Brazil, where another record crop is expected.
  • With harvest already 77% complete as of Sunday, traders are not concerned about rain delays in the Corn Belt.

Wheat is around 4 cents lower in the SRW market while HRW wheat is 1 to 2 cents lower. HRS wheat is narrowly mixed.

  • Disappointment that export sales for the three-week period where releases were disrupted due to the government shutdown did not see exporters increasing there purchases is weighing on the wheat markets today. Sales of 1.309 MMT for 2013-14 met expectations.
  • But selling is being limited by strong corn export sales during this period, which could also help lift wheat demand down the road.
  • News Ukraine's grain exports rose to 1.1 MMT to 3.4 MMT in October from the month prior is also putting light pressure on the wheat market.
  • Dollar strength is also encouraging profit-taking.

Live and feeder cattle futures are posting slight to moderate gains.

  • Traders are favoring the upside after limited cash cattle trade at higher prices and in anticipation of today's Cattle on Feed Report reflecting tight supplies.
  • The report is expected to show On Feed at 92.6%, Placements at 100.7% and Marketings at 104.3% of year-ago levels.
  • Light cash cattle trade took place in the dressed market in Kansas yesterday at $212, up $4 from the week prior, while Iowa saw a few pens trade at $132.50 in the live market.
  • Futures are trading near the upper part of last week's range.
  • Choice boxed beef values firmed $1.44 and Select rose $1.97 yesterday to $205.68 per cwt. and $190.09 per cwt., respectively. Movement was decent considering lofty price levels at 159 loads.
  • Beef export sales for Oct. 3-24 at 55,500 MT reflect strong beef demand.
  • Expectations for the COF Report to reflect tightening calf supplies are lifting feeder cattle.

Nearby lean hog futures are seeing some light followthrough selling today, while deferred months are mixed.

  • Lean hog futures gave technical signals it may have put in a top (though it has given false signals in the past), which is resulting in some followthrough sales today.
  • The pork cutout value fell $1.58 yesterday, but softer prices encouraged strong movement of 476.79 loads.
  • The cash hog index is on the decline as supplies are building. December hogs are in line with it.
  • Packers are still enjoying very profitable margins, but they are planning a small Saturday kill. Thus, cash hog bids are steady to lower this morning.
  • Traders are also evening positions to close their books for the month.
  • The market is also readying for the Cold Storage Report that is expected to show frozen pork stocks at the end of September around 562.1 million lbs., up 4% from last month, but down 10% from year-ago.
  • Pork export sales for Oct. 4-24 failed to impress at 23,500 MT.
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