Market Snapshot, 10:00 am CT (VIP) -- October 9, 2013

October 9, 2013 05:13 AM
 

Corn futures are enjoying gains of mostly 2 to 4 cents today.

  • Ideas the downside was overdone, especially considering reports that prices are building export demand, are lifting the corn market.
  • News from export sources a private Chinese firm purchased 420,000 MT of U.S. corn last week signals prices are attractive to exporters. The official says the price it paid for the U.S. corn is around 20% cheaper than domestic Chinese corn prices.
  • Reports that lower corn prices are bringing ethanol plants back on line are also providing light support. However, weekly ethanol production fell 7,000 the week ended Oct. 4 to 868,000 barrels per day. Ethanol stocks fell 119,000 barrels to 15.39 million barrels.
  • Strength in the U.S. dollar index and ongoing harvest efforts are making it tough for bulls to gain any traction.
  • Also, private firm Lanworth raised its 2013-14 U.S. corn production estimate by 225 million bu. to 13.708 billion bu. today. It also raised its world corn production estimate by 4 MMT to 953 MMT, citing larger-than-expected U.S. yields.
  • Conab estimates Brazil's 2013-14 corn crop will be between 78.4 MMT and 79.6 MMT. This would be down from the 2012-13 record-large 81.3 MMT crop.

 

Soybean futures are fractionally to 4 cents lower this morning. Nearby contracts have traded in positive territory at times today.

  • Soybeans are seeing light followthrough selling to start the day.
  • Ongoing harvest efforts and reports of better-than-expected yields are keeping most on the sell side today. Traders are also discouraged by the November contract's inability to close above the $13.00 level.
  • Citing better-than-expected yields in some Midwest states, Lanworth raised its soybean production estimate to 3.160 billion bu. from 3.112 billion bushels. The firm also upped its world soybean crop estimate by 2 MMT to 286 MMT.
  • Traders are also being reminded of Brazil's larger crop potential in the year ahead. Brazil's crop-estimating agency, Conab, forecasts the upcoming crop between 87.6 MMT and 89.7 MMT. If realized, this would be well above last season's 81.3 MMT crop.
  • But basis levels at interior locations are steady to higher as harvest is still advancing at a relatively slow pace and farmers have been reluctant to sell off the combine. Rains are expected to slow harvest efforts again this weekend.

 

Wheat futures are off to a choppy start with the SRW market favoring the upside and the HRW and HRS markets favoring the downside.

  • Dollar strength is encouraging profit-taking in the wheat market as it has posted strong gains the past several weeks.
  • But pressure is being limited by news Brazil's supply estimating agency, Conab, cut its forecast for the 2013-14 wheat crop by 180,000 MT from last month to 4.77 MMT.
  • Forecasts for dry weather to return to southern Russia are expected to allow for a resumption of winter wheat seeding. But total winter grains area is still seen down from earlier expectations as some areas are still dealing with excessive moisture and cold temps.
  • FranceAgriMer raised its 2013-14 soft wheat export forecast for France outside the EU by 200,000 MT from last month to 11.2 MMT.

 

Live cattle futures are posting slight losses across the board. Feeder cattle futures are mixed with a downside bias.

  • News that South Korea is suspending some imports of U.S. beef after finding the feed additive zilpaterol in 22 MT of beef from a Colorado Swift Beef Co. plant is encouraging some light selling.
  • Selling interest is being limited by bullish cash cattle hopes. Bids at $123 are countered by asking prices of $128 or higher, signaling late-week trade is again likely. Last week, sales took place at $126.
  • Showlists are tighter in most locations this week and Choice cuts firmed 14 cents yesterday according to Urner Barry. This should give feedlots an advantage in negotiations. But futures already have higher cash trade factored into prices, opening the door for light profit-taking.
  • Countering this are reports that thousands of cattle may have been killed in last week's blizzard in South Dakota.
  • Strength in the corn market is encouraging light profit-taking in feeder cattle futures.

 

Lean hog futures are favoring the downside.

  • Light position evening is resulting in choppy lean hog action today. With futures near teh contracts highs, some traders are taking profits.
  • A lack of official market data due to the government shutdown means trading interest is limited.
  • Supplies are thought to be expanding seasonally and slaughter is said to be ramping up as temps cool and retailers feature pork for national pork month. Cash hog bids are mostly steady today as packers are planning a large Saturday kill.
  • But there has been limited insight as to how the product market is performing. Some private sources report pork cutout values softened yesterday.
  • There is also some nervousness about the settlement process ahead of the expiration of October lean hog futures next week, despite CME Group's guidance on the matter.
     
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