Market Snapshot, 10:00 am CT (VIP) -- October 1, 2013

October 1, 2013 05:17 AM
 

 

Corn futures are mostly 3 to 5 cents lower.

  • Corn futures are seeing mild followthrough selling after USDA's bearish Quarterly Grain Stocks Report Monday. Heavy pressure from the soybean market is also weighing on corn futures this morning.
  • While Sept. 1 corn stocks of 824 million bu. are still tight, traders are adding fresh short positions as this adds to total supplies for the 2013-14 marketing year.
  • Yesterday's crop progress update from USDA that showed harvest is just 12% complete as of Sunday, whereas traders had expected it to be 15% done. This raises concerns about the slow-developing crop, though this also points to drawn out harvest pressure.
  • The condition of the U.S. corn crop improved last week according to both USDA's ratings and the Pro Farmer Crop Condition Index.
  • Gulf basis surged 8 cents for November delivery this morning, possibly signaling demand news is on the horizon.
  • But technicals favor market bears as December corn hit a three-year low yesterday and deferred months marked new contract lows on bearish reversals following the report.

 

Soybean futures are posting double-digit losses through the July contract with nearby contracts pacing losses.

  • Soybeans are seeing heavy technical-based selling today after the market staged a downside breakout following the release of USDA's bearish soybean stocks data Monday.
  • Also, Gulf basis fell 1 to 4 cents for October and November delivery this morning, indicating harvest is making more supplies available and/or exporters are waiting to see how low prices dip before booking needs.
  • USDA this morning announced a 113,000-MT daily soybean sale to China for 2013-14 delivery.
  • USDA's Crop Progress Report yesterday signaled harvest progressed as expected for beans over the last week to 11% complete.
  • Also, USDA crop condition data translated to a 4-point uptick in the soybean crop on the Pro Farmer weighted Crop Condition Index to 339 (0 to 500 scale).
  • Outside markets are a mixed bag in terms of direction as the market sorts out the impact of a partial government shutdown. The stock market is firmer, the dollar is chopping around unchanged and crude oil futures are under pressure.

 

Wheat futures are the outlier today, with the winter wheat markets mixed and the HRS market 3 to 5 cents higher.

  • Wheat futures are enjoying some light corrective short-covering this morning as wheat continues to give signs strong demand has helped the market put in a low.
  • Also, USDA's report data yesterday revealed tighter than expected Sept. 1 wheat stocks of 1.855 billion bu. while the all wheat peg from the Small Grains Summary came in just a bit above expectations.
  • Russia cut its September grain exports to somewhere between 2.6 MMT and 2.8 MMT due to stepped-up competition in the Black Sea region. This compares to exports of 3.53 MMT in August. September is typically the peak month for Russian grain exports.
  • Reports that rain has slowed winter grain sowing in the Black Sea region has raised concerns about a diminished 2014 wheat crop.
  • Spillover pressure from corn is keeping the winter wheat markets mixed.

 

Live cattle futures are facing relatively light pressure this morning, while feeder cattle are mixed.

  • Risk aversion is putting light pressure on the cattle market as the market attempts to gauge the impact of a partial government shutdown on the economy and consumer's willingness to pay historically high beef prices.
  • Tighter showlists and beef strength lifted cash prices last week. This week showlists are again tighter in all locations except Colorado and the boxed beef market posted gains to start the week.
  • Key will be whether packers, who are cutting in the red, will be willing to again raise bids. Extended negotiations are likely.
  • October futures are around a $1 above last week's cash action at $126 in the Southern Plains, opening the door for a slight pullback.
  • Traders are weighing profit-taking against softer corn prices in the feeder cattle market.

 

Lean hog futures got off to a firmer start, but the market has since softened to post slight to moderate losses.

  • Friday's Quarterly Hogs & Pigs Report that showed the impact of the porcine epidemic diarrhea virus (PEDV) was less severe than anticipated continues to pressure lean hogs.
  • The cash hog market has trended steady to lower in recent sessions as packers are bought ahead and supplies are more readily available.
  • The pork market got off to a solid start to the week as the pork cutout value rose 31 cents yesterday, though movement failed to impress at just 268.95 loads. The pork cutout value has risen for five consecutive days, but the higher prices have slowed movement.
  • This along with softer cash prices has resulted in very strong packer profit margins.
     

 

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