Market Snapshot, 10:00 am CT (VIP) -- October 16, 2013

October 16, 2013 05:07 AM
 

Corn futures are mostly 2 to 4 cents lower this morning.

  • Corn futures opened the daytime session slightly higher on export news but those gains were trimmed shortly after open-outcry trading began.
  • Export sources confirmed to Reuters private Chinese firms have bought 300,000 MT of U.S. corn this week and are shopping for more. Chinese buyers say U.S. corn is 20% to 25% cheaper than domestic supplies, which leads to expectations more buys are coming.
  • Gulf corn basis is steady to 1 cent higher for nearby delivery to reflect improved demand.
  • However, the realization harvest is just getting started and that the bulk of the hedge-related pressure is headed toward the market has futures on the defensive.
  • The market continues to process news yields are proving better than expected, which adds further pressure on futures.
  • A strengthening of the U.S. dollar index after it traded lower overnight is also price-negative for corn futures this morning.

 

Soybean futures are 3 to 8 cents higher.

  • Short-covering continues to dominate today's trading as November futures failed to find followthrough selling below the early October lows early this week.
  • Traders are waiting for export news, which is lacking in rumor form. But traders suspect China is also using the drop in soybean prices to book some supplies.
  • Ideas soybean harvest will or has crossed the halfway point is easing trader concerns over harvest-related hedge pressure.
  • In addition, farmer selling of what has been harvested has been less than anticipated, which is helping firm basis levels.
  • Gulf soybean basis is unavailable this morning and there is no talk of Chinese purchases.

 

Wheat futures are 1 to 6 cents lower with HRW contracts leading declines.

  • Wheat futures are weaker on followthrough selling after a poor close Tuesday and spillover from the corn market.
  • A price reversal in the U.S. dollar index is also weighing on wheat. After favoring the downside overnight, the dollar has firmed this morning.
  • Technical-related selling has moved into the market as December SRW has slumped below last week's low and December HRW has fallen under support.
  • Adding to the selling pressure are views recent rains across the Central and Southern Plains are aiding development of the winter wheat crop.
  • But concerns about another frost/freeze event in the forecast for Argentina as well as acreage concerns in Russia and Ukraine raise questions about the global crop outlook.

 

Live cattle and feeder cattle futures are slightly to moderately higher.

  • Live cattle futures are higher on expectations of steady to higher cash cattle prices.
  • Showlists are reportedly down from week-ago, except in Colorado. Feedlots are reportedly asking $130 in the Southern Plains where trade occurred at $128 last week.
  • Private firm Urner Barry reports boxed beef prices have climbed but packer cutting margins remain in the red.
  • Urner Barry pegs Tuesday slaughter at 432,000 head compared to 433,000 last week and 431,938 a year ago.
  • Even though the government shutdown means now Cattle on Feed Report Friday, a poll by Reuters indicates analysts expect feedlots placements were up 1.6% in September versus a year ago. However, traders point out last year's placements were sharply reduced.
  • The weaker corn market is aiding both live cattle and feeder cattle futures.

 

Lean hog futures are slightly to moderately higher.

  • Hog futures are higher as the cash prices continue to hold stronger-than-expected, though cash bids are mostly steady to $1 weaker today.
  • According to Urner Barry, pork cutout values slipped $1.44 yesterday to tighten packer profit margins.
  • Urner Barry also reports Tuesday's hog slaughter was 122,000 head compared to 122,000 last week and 128,242 a year ago.
  • Traders continue to expect fundamentals to weaken seasonally, which could prompt funds to again exit the market.
  • December lean hog futures are testing the contract high. A surge through the high could trigger buy stops. Failure at the high could send funds to the exit.
     
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