Market Snapshot, Noon CT -- (VIP) -- November 1, 2013

November 1, 2013 07:13 AM


The corn market is 1 to 3 cents lower as bearish attitudes prevail.

  • This market cannot shake the dominant bearish attitude of traders and the oppressive short positions held by funds.
  • Strength in the U.S. dollar index today contributes to the negative tone.
  • In addition the market is absorbing reports Informa raised its yield and production estimates for the 2013 corn crop. It reportedly raised its average yield estimate to 161.2 bu. per acre from 158.8 in its last monthly report, and pegged production at a record-high 14.223 billion bu., up from 14.010 billion previously.This compares to USDA's projections of 155.3 bu. per acre and total production of 13.84 billion bu. released in September.
  • Traders show little interest in news the U.S. ag attaché in Argentina forecasts the 2013-14 Argentine corn crop at 24 MMT, which is 2 MMT below USDA's current estimate, as it is quite early in the growing season.
  • Private analytical firm Informa Economics reportedly cut its projection of Argentina's 2013-14 corn production to 25 MMT from 27 MMT, citing below-normal October rainfall that has delayed planting.
  • Gulf corn basis rose a penny for November through January delivery in late-morning trading. Market watchers suggest this could signal more export business is ahead.

Soybean futures continue to lose ground and are 8 to 13 cents weaker with nearbys leading losses.

  • The market's inability to rally in the face of highly impressive export news has traders taking an increasingly negative view toward prices. The strong U.S. dollar adds pressure.
  • Informa Economics reportedly pegs 2013 average yields at 43.3 bu. per acre, up from 41.7 earlier. It reportedly estimates total production at 3.298 billion bu., up from 3.176 billion earlier. USDA in September forecast an average yield of 41.2 bu. per acre and total production of 3.15 billion bushels.
  • Expectations for a record-large bean crop in South America and reports that yields in the U.S. have been better-than-expected have made it tough for the bean market to respond to strong demand news, as demand strength has been a constant for the market.
  • Traders expect Monday's crop progress update from USDA to show harvest moving into the final stages.
  • USDA announced export sales of 115,000 MT of soybeans to China and a 33,000-MT soyoil sale to an unknown destination -- all for 2013-14. But again, this is simply providing underlying support.
  • Gulf basis is unchanged for November delivery but 1 cent higher for December delivery 3 cents stronger for January delivery and a whopping 16 cents higher for February delivery in late-morning trading. This signals strong export demand.

SRW wheat is 1 to 3 cents higher. Nearby HRW contracts are 1 to 4 cents lower with deferred fractionally higher. HRS wheat futures are mixed.

  • Corrective short-covering continues to dominate the SRW market, but strength in the U.S. dollar index and spillover from corn are pressuring other flavors.
  • Rain in the forecast for winter wheat country next week is seen as favorable for the establishing crop. The market will get a condition and progress update from USDA on Monday.
  • Concerns that wheat demand has softened as prices rose is also limiting buying interest in wheat. Wheat export sales were notably unimpressive for the Oct. 4-24 period, despite a big drop in the U.S. dollar index during that period.
  • News the U.S. ag attaché in Argentina has lowed its forecast for the 2013-14 wheat crop to 10.5 MMT, which is 1.5 MMT below USDA's current estimate is helping to lift the SRW market today.
  • Gulf SRW wheat basis is unchanged in late-morning trading.

Live cattle and feeder cattle futures are slightly weaker today with the exception of January feeder cattle futures, which are slightly higher.

  • Evening positions ahead of the weekend is the dominant theme in today's trading.
  • Traders have shrugged off yesterday's slightly friendly Cattle on Feed (COF) Report. It showed Placements a touch above expectations at 101% of year-ago, Marketings stronger than expected at 106% of year-ago and On-Feed just below expectations at 92% of year-ago levels.
  • Traders are looking for direction from the cash market, where very little action has occurred recently. Showlists are up slightly from the week prior, but are still viewed as on the tight side.
  • Traders are concerned about beef demand and yesterday's Cold Storage Report added to those concerns. It showed frozen beef stocks at the end of September up 3% from the month prior and 5% above year-ago whereas traders had expected a mild decline from month ago and a 1.5% increase over year-ago.
  • Adding to those concerns, today's Choice boxed beef is 84 cents lower and Select beef is 50 cents lower this morning. Movement is an anemic 46 loads.

Lean hog futures continue to trade slightly to moderately lower this morning.

  • Weakness in cash hog prices, declines in wholesale pork prices and a negative technical picture has hog futures on the negative side of unchanged.
  • Traders continue to lean to the sell side in followthrough to the strong negative chart signals traced this week since the bearish key reversal down posted Wednesday.
  • Cash bids have declined along with the cash hog index, adding further pressure on futures.
  • Hog runs are on the rise and packers have their needs covered, resulting in steady to lower cash bids.
  • Yesterday's Cold Storage Report showed frozen pork stocks at the end of September slightly heavier than anticipated, which is adding to today's negative tone. Stocks were down 10% from year-ago, whereas traders had anticipated a 10.4% decline.
  • The pork cutout value declined 74 cents this morning and movement is a moderate 156.27 loads.
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