Market Snapshot, 10:00 am CT (VIP) -- October 8, 2013

October 8, 2013 05:09 AM
 

Corn futures have softened to post losses of around 7 to 8 cents in most contracts.

  • Recent gains have spurred some farmer selling as new-crop supplies come available. This has caused basis levels at some interior locations to soften.
  • Warm, dry weather for the Midwest this week is expected to result in active harvest and, therefore, related hedge pressure. Rains are expected to return over the weekend, however.
  • Reports of better-than-expected yields adds some incentive for traders to sell.
  • The market is ignoring signs the price break in corn has increased export demand. Due to the government shutdown, traders are having to rely solely on private sources for export demand news.
  • France's farm ministry cut its corn crop estimate by 100,000 MT to 15.5 MMT, but that's still up 2.9% from year-ago.

 

Soybean futures saw higher trade overnight and early this morning, but have since given way to profit-taking. Most contracts are 6 to 11 cents lower.

  • Traders are taking advantage of recent gains by booking profits this morning. This triggered sell-stops. Weakness in the corn market adds pressure.
  • Traders increased sales after the November contract failed to find active buying interest above $13.00.
  • Pressure also stems from ongoing harvest efforts. The weather is favorable for farmers getting back into fields this week, though rains are expected to return this weekend.
  • Traders are ignoring tight carryover supplies and strong demand that have kept basis levels at historically high levels. Export inspections data yesterday indicated exporters are upping their bean buys.

 

Wheat futures have softened to post mixed trade s in the SRW market, while other flavors are choppy with an upside bias.

  • Wheat is facing some profit-taking pressure today as the market has staged an impressive run higher since mid-September.
  • Losses in the corn market are also making it tough for wheat bulls today.
  • But crop concerns in the Black Sea region are limiting selling interest. Winter weather has halted seeding of winter grains across areas of Russia and Ukraine.
  • Also, France's farm ministry cut its wheat crop estimate by 117,000 MT from last month to 36.9 MMT, although that still represents a 3.8% increase from year-ago. The country's soft wheat exports since the start of the 2013-14 marketing year total 2.6 MMT, a 17% increase from the previous marketing year.

 

Live cattle futures are off to a mixed start, with nearbys enjoying slight gains. Feeder cattle futures are enjoying moderate gains.

  • Traders are evening positions in live cattle to start the day as they form early cash expectations. Early indicators are for steady to higher trade.
  • Showlist estimates are estimated to be down 19,000 head across Kansas, Texas and Colorado, but they are up around 5,000 head in Nebraska. This should give feedlots the advantage in negotiations.
  • Early asking prices are at $128; packers have not yet placed bids.
  • The front-month contract is already at a $2 premium to last week's mostly steady cash cattle trade at $128, curbing buying enthusiasm.
  • But packers are thought to be cutting in the red, which could limit their willingness to pay up for supplies.
  • USDA has halted the release of daily boxed beef trade information, leaving traders to turn to private sources for direction. Urner Barry reports Choice boxed beef values rose 18 cents yesterday while Select was up 77 cents.
  • Weaker corn prices are lifting the feeder cattle market.

 

Lean hog futures are narrowly mixed this morning amid light trade.

  • Increasing packer demand is expected to keep the cash hog market mostly steady today. A large kill is expected Saturday. Processors have begun implementing new buying methods to work around the government shutdown.
  • Cutting margins are thought to be strong as packers have kept cash hog bids steady to lower recently.
  • Without daily slaughter and pork cutout data, traders are watching the cash market more closely.
  • The lean hog market is also benefiting from the strong technical posture it holds after putting in a near-term low at the start of the month thanks to ideas the selloff in reaction to a bearish Quarterly Hogs & Pigs Report was overdone.
     
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