Market Snapshot, 10:00 am CT -- (VIP) -- October 3, 2013

October 3, 2013 05:05 AM

Corn futures have traded on either side of unchanged this morning, with bulls holding a slight advantage. Most contracts are fractionally higher.

  • Traders are focused on evening positions this morning on a relatively quiet news day, thanks to the government shutdown.
  • Rain is moving into the Midwest today and is expected to linger into the weekend. Showers for the most part are too late to improve crop conditions. Precip will likely result in the pace of harvest on this slow-developing crop falling even farther behind the average pace. Frost is possible in the Dakotas, though damage is expected to be minimal.
  • Gulf basis slipped 2 cents for immediate delivery while basis for deferred delivery was steady to 3 cents higher.
  • Sources report Asian feedmakers are using the price break to increase coverage and export data leading up to the government shutdown signaled corn prices were rebuilding demand. But overnight export sales activity indicates the U.S. faces competition from South America.
  • The technical pattern of the corn market still favors market bears.

Soybean futures are enjoying gains of 6 to 11 cents with nearbys leading to the upside.

  • Followthrough buying today after yesterday's corrective gains have spurred cautious optimism the bean market could be working on a low.
  • Also, the lack of daily or weekly export sales data following a big price break makes traders uneasy they might be unaware of large buys by exporters, especially with export sources reporting Asian feed buyers have stepped up their purchases.
  • Support also stems from an uptick in soybean basis in the Midwest today (at river locations, a hefty one), as farmers have been reluctant to sell beans off the field and rains will stall harvest over the next few days. Plus, old-crop supplies are very tight.
  • Gulf basis rose another penny for immediate delivery this morning.
  • There is also some thought that recent losses in the U.S. dollar index and a flow of money out of the stock market could shift some speculative money to the commodity sector.

Wheat futures are 4 to 10 cents higher in the winter wheat markets with deferred months leading to the upside. The HRS market is 7 to 8 cents higher.

  • As the wheat market continues to climb, there is growing confidence the market may have put in a seasonal low. Gains in the corn market today is also making it easier for the market to rally.
  • Expectations are that demand for U.S. wheat remains strong, especially given recent weakness in the U.S. dollar index. Pre-report expectations for the weekly export sales report that was not released due to the government shutdown were for sales between 500,000 MT and 750,000 MT.
  • Traders are also watching global weather developments due to problems with delayed seeding of the winter wheat crop in Ukraine and areas of Russia and concerns about freeze damage in Argentina.
  • The Food and Agriculture Organization of the United Nations cut its forecast for world wheat output to 704.6 MMT from 709.8 MMT previously.

Live and feeder cattle futures are facing light pressure today.

  • Traders are taking advantage of yesterday's gains by booking profits. The lack of daily market data due to the government shutdown is also encouraging some to exit the market.
  • Based on tighter showlist estimates and reports of early week strength in the boxed beef market, expectations are for at least steady cash cattle trade this week compared with last week's $126 action on the Southern Plains.
  • But nearby contracts already have at least a $1 premium factored into prices, opening the door for some light profit-taking. Bid and asking prices remain $4 to $6 apart, signaling trade will likely hold off until Friday.
  • Slight improvement in the severity of the drought in Texas and the footprint in Kansas is also limiting selling. If this trend continues to improve pasture conditions, it could lead to further supply tightening ahead.

Lean hog futures are enjoying slight to moderate gains this morning.

  • The lean hog market continues to benefit from ideas the downside was overdone in reaction to last week's Hogs & Pigs Report that signaled the impact of the porcine epidemic diarrhea virus (PEDV) was less than anticipated. There has been some speculation the report did not fully account for the virus.
  • The lack of daily pork and slaughter data has also encouraged some to exit short and long positions and head to the sidelines. Saturday's kill is expected to be down slightly from year-ago.
  • Cash hog bids are again steady to $1 lower today as supplies are thought to be more readily available and many packers are bought ahead on this week's needs.
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