Market Snapshot, 10:00 am CT (VIP) -- November 6, 2013

November 6, 2013 04:10 AM
 

Corn futures are marginally lower this morning.

  • Trader willingness to add positions ahead of Friday's Crop Production and Supply & Demand Reports remains highly limited. So is their willingness to cover short positions.
  • While the market fully expects USDA to raise its corn production estimate due to reports of "better-than-expected" yields, the cancellation of the October batch of reports means there is much uncertainty regarding where numbers will come in.
  • Lanworth expects corn production of 13.95 billion bu. with a national average yield of 157.5 bu. per acre. The firm also raised its world 2013-14 corn production outlook by 3 MMT to 958 MMT on expectations for larger crops in the U.S. and Ukraine.
  • Brazilian media reports China has agreed to allow imports of Brazilian corn. China sources the bulk of its corn imports from the U.S., but Brazil's ag ministry expects China to eventually buy up to 10 MMT of Brazilian corn each year.
  • Ethanol production fell 9,000 barrels per day (bpd) to 902,000 bpd the week ended Nov. 1. Ethanol stocks rose 204,000 barrels to 15.17 million barrels.
  • Gulf basis is steady to a penny lower today, signaling harvest is making supplies available.
  • A weaker U.S. dollar index is helping to limit pressure on corn futures today.

 

Soybean futures are 3 to 5 cents higher this morning.

  • Corrective short-covering is lifting soybean futures this morning. Weakness in the U.S. dollar index is also encouraging to that end.
  • But anticipation of USDA's reports means buying interest outside of positioning will remain limited.
  • Traders look for USDA to raise its soybean yield estimate due to reports of better-than-expected yields throughout harvest.
  • Lanworth expects U.S. soybean production of 3.293 billion bu. with a national average yield of 42.7 bu. per acre. The firm also raised its global production forecast on expectations for a larger U.S. crop by 2 MMT to 290 MMT.
  • Gulf basis rose a penny for November and December delivery this morning, reminding of ongoing soybean demand strength. Also, recent and expected precip are seen slowing grain movement to market. As a result, basis at some interior locations has strengthened.

 

Wheat futures have softened to steady to a penny lower in the winter wheat markets, while HRS wheat is mixed with nearby contracts mostly higher.

  • Spillover from the corn market is pressuring the winter wheat markets. But a weaker U.S. dollar index is helping to limit pressure.
  • The strong start to the growing season for the U.S. winter wheat crop is making it tough for wheat to rally. There is a hard freeze warning in some areas of Kansas today, however.
  • Also limiting interest in adding positions is anticipation of USDA's reports Friday.
  • The U.S. will not get any of the business from the Egyptian tender as no bids for U.S. wheat were offered. Official results are still awaited.
  • Lanworth left its world wheat production estimate unchanged from last week at 707 MMT.

 

Live cattle opened under pressure, but the market has since improved to trade mixed with an upside bias. Feeder cattle futures are posting slight to moderate gains.

  • Trade in the live cattle market is choppy amid uncertainty regarding cash cattle prospects this week.
  • Showlist estimates are up at all locations this week after light trade last week.
  • While boxed beef prices are still at historically high levels, Choice cuts slipped 11 cents yesterday, though Select firmed 55 cents. The high prices have limited movement in recent weeks, raising concern about the sustainability of current prices.
  • Initial asking prices are above the bulk of last week's trade at $132, while early bids are around $130 in Nebraska.
  • Selling is also being limited by news Russia will lift its ban on U.S. beef.
  • Weaker corn prices and losses in the U.S. dollar index are encouraging followthrough buys in feeder cattle futures.

 

Lean hog futures gapped lower on the open and are posting moderate losses.

  • Losses in the pork product and cash hog markets are pressuring lean hog futures today.
  • The pork cutout value slid $1.08 yesterday and movement at 315.17 loads was decent, but not impressive.
  • Meanwhile, supplies are readily available, which is keeping the cash hog market steady to lower, despite wide packer profit margins.
  • Average hog weights in Iowa and southern Minnesota rose 1.9 lbs. the week ended Nov. 2, confirming building supplies.
  • The December lean hog contract is trading in line with the cash hog index, which is limiting both buying and selling interest.
     
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