Market Snapshot, Noon CT -- Advice -- October 18, 2013

October 18, 2013 07:07 AM
 

Corn futures continue to trade slightly higher after a weaker open.

  • Corn futures are up fractionally on short-covering, weakness in the U.S. dollar and sharp gains in wheat futures.
  • The price gain ahead of the weekend is somewhat contra-seasonal, as hedge pressure normally dominates action in anticipation of harvest over the weekend. Only minor harvest delays are expected through the weekend and well into next week, which has traders looking for an increase in hedge-related pressure.
  • USDA will release the Weekly Export Sales Report at 2 p.m. CT today for the week ended Sept. 26, according to Reuters. The department has not yet announced when data for the other missed weeks will be released.
  • An informal poll of analysts by Reuters pegs the national average corn yield at 157.175 bu. per acre, up from USDA's 155.3 average posted in September. However, the poll found analysts trimming their harvested acreage estimate compared to USDA with the result of an average total production estimate of 13.829 billion bu. versus USDA's 13.843 billion bu. made in September.
  • Private analyst Informa Economics has reportedly lowered its 2014 corn planting estimate by 1 million acres to a total of 91.7 million acres.
  • Basis for corn at interior locations is softening, signaling harvest efforts have picked up the latter half of the week and that more farmers are marketing their crop.
  • Gulf basis firmed a penny for immediate delivery at midday.

 

Soybean futures are 2 to 5 cents lower.

  • Profit-taking has turned the market lower along with disappointment the government has yet to announce "large" soybean buys occurred during the government shutdown. USDA will reportedly release export sales data for the week ended Sept. 26 at 2:00 p.m. CT today, but it has not yet said when subsequent data will be released.
  • USDA did announce daily export sales of 222,000 MT of U.S. beans to China and 140,000 MT to unknown destinations, both of which are for 2013-14 delivery.
  • Gulf basis jumped 1 to 2 cents for November through February delivery at midday, signaling export demand news may be ahead.
  • A private survey of analysts conducted by Reuters found them boosting their average national soybean yield guess slightly to 41.931 bu. per acre, compared to USDA's 41.2 bu. issued in September. The survey also found analysts looking for a total production estimate of 3.191 billion bu., up slightly from USDA's 3.149 made in September.
  • Private analytical firm Informa Economics reportedly increased its 2014 soybean planted acreage estimate by 300,000 acres to a record 83.9 million acres. This is pressuring November 2014 futures as a result.
  • The market is finding some support from the improved technical picture and ideas the bulk of harvest-related hedge pressure is behind the market.
  • Basis levels at interior locations are holding steady for the most part as new supplies are being met with strong demand.

 

Wheat futures are seeing strong gains of 10 to 18 cents, with nearby contracts leading the move higher.

  • Rising optimism over export prospects along with a weaker U.S. dollar has wheat futures on the rise. Traders are hopeful USDA's export sales data for the week ended Sept. 26 to be released this afternoon will reflect strong demand.
  • Futures are also finding support from news the Argentine ag ministry pegs its 2013-14 wheat crop at 8.8 MMT, which is lower than most private estimates.
  • SovEcon today said Russia will likely cut its grain exports in October to between 2.6 MMT and 2.7 MMT as the country is facing tougher competition. The country exported 3.53 MMT in August and 2.93 MMT of grain in September.
  • The market is shrugging off reports Informa Economics increased its 2014 wheat seedings estimate by 1 million acres to a total of 57.7 million acres.

 

Live cattle futures are narrowly mixed at midday. Feeder cattle futures are weaker.

  • Cattle futures have turned mixed following corrective short-covering in earlier trading.
  • Traders are also absorbing some negative news on wholesale beef prices as USDA indicates Choice boxed beef is down 62 cents and Select beef is $1.73 lower on dismal movement of only 90 loads.
  • Limiting the downside is the stronger cash prices of $129 to $130 paid in the Southern Plains and expectations supplies will tighten going forward.
  • The market will not get an update on feedlot numbers until month's end when USDA releases the Cattle on Feed Report. It was originally scheduled to be released this afternoon.
  • Feeder cattle are weaker on profit-taking ahead of the weekend. Traders are willing to put some money in their pockets after the recent price surge.

 

Lean hog futures are slightly weaker.

  • Hog futures are weaker on followthrough selling after yesterday's poor finish.
  • Cash hog prices are listed as steady to firmer.
  • But pork cutout figures from USDA are negative, showing a decline of $2.94 on moderate movement of 169 loads. The decline narrows packer margins at a time that slaughter runs are starting to build. However, kill numbers are still below year-ago levels.
  • Traders continue to look for hog supplies to rise seasonally but are reluctant to take major positions in the market until the flow of government-supplied data returns to normal and the CME lean hog index is operational again.
     
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