Market Snapshot, 10:00 am CT (VIP) -- November 5, 2013

November 5, 2013 04:04 AM
 

 

Corn futures are posting fractional losses in most contracts.

  • USDA reports corn harvest was 73% complete as of Sunday, which is slightly ahead of the five-year average pace. As a result, concerns about harvest delays the first half of this week are minimal.
  • Strength in the dollar index is also pressuring corn this morning, as is spillover from the bean market.
  • Also, traders expect USDA on Friday to raise its crop production estimate from September amid reports of "better-than-expected" yields.
  • On the other hand, corn prices are rebuilding export demand. USDA this morning announced South Korea purchased 140,000 MT of corn and an unknown buyer purchased 126,000 MT of corn -- all for 2013-14 delivery.
  • Gulf basis is steady this morning, but basis at interior locations is steady to higher as farmer selling has been light and rain is slowing harvest efforts this week.

 

Soybean futures have erased overnight gains and most contracts are now 1 to 3 cents lower.

  • Traders remain hesitant buyers. Strength in the U.S. dollar index is price-negative.
  • Private crop estimates are illustrative of ideas USDA will raise its production estimate on Friday as end-of-season growing conditions were favorable.
  • Meanwhile, the fact that soybean harvest is 86% complete eases concerns about harvest delays due to rain and snow in the Corn Belt. The pace is slightly ahead of the five-year average.
  • But Midwest precip and slow farmer selling has lifted basis levels at interior locations.
  • While soybean demand remains strong, recent market action signals traders view this as factored into prices.
  • Reports Brazil may raise its biodiesel blend requirement for diesel fuel as soon as January from 5% to 7% is helping to limit pressure as this would imply around 10% more of the country's 2013-14 crop would be crushed and therefore, not exported as raw soybeans.
  • Attitudes toward the grain and soy markets remain bearish, which is making it tough for beans to find sustained buying interest.

 

Wheat futures have softened to post losses of 4 to 8 cents for the SRW market, while HRW and HRS wheat are seeing slightly lighter losses.

  • USDA yesterday raised the amount of winter wheat rated "good" to "excellent" to 63%, up 2 percentage points from the week prior.
  • When these numbers are factored into Pro Farmer's weighted Crop Condition Index, the HRW crop improved 4 points to 364 (0- to 500-point scale) and the SRW crop improved 1 point to 378.
  • And more rain in winter wheat country this week is expected to further boost the condition of the establishing crop.
  • According to official Russian trade data, the country has exported 11.177 MMT of grain the first four months of 2013-14, up 8.5% from year-ago.
  • Meanwhile, Gulf SRW wheat basis is steady to 3 cents firmer for November and December delivery, respectively, possibly signaling the recent price decline has improved export demand.

 

Live cattle futures are posting slight gains this morning. Feeder cattle futures are moderately to sharply higher.

  • Expectations for lower feed costs going forward are lifting feeder cattle futures this morning. This is providing spillover support to the live cattle market.
  • Showlist estimates are heavier at all locations after light trade last week at mostly $132, with a few sales in Texas and Nebraska at $133. While packer profit margins have improved, most are still in the red.
  • But gains in the boxed beef market could help support the cash market again this week. Yesterday, Choice boxed beef values firmed 96 cents and Select gained 29 cents. Movement was again on the light side, however, at 122 loads.
  • Lighter beef movement keeps traders on watch for a top in the product market.

 

Lean hog futures are off to a mixed start.

  • Buying and selling interest is limited in the lean hog market amid uncertainty about near-term price direction.
  • The hog market saw major chart damage last week, but yesterday's price action shows some believe prices have dipped "far enough."
  • The pork cutout value firmed 85 cents yesterday and movement was decent at 318.73 loads.
  • This adds to already strong packer profit-margins. This is giving packers incentive to keep kill lines full. Expanding supplies are enabling them to bid steady to lower prices for cash hog supplies.
  • Meanwhile, the cash hog index continues to soften. It is now at roughly a $1 discount to the December contract. This, too, is limiting buying interest in the contract.
     

 

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