Market Snapshot, Noon CT -- (VIP) -- October 10, 2013

October 10, 2013 07:00 AM

Corn futures continue to trade 3 to 5 cents lower.

  • Corn futures are lower on rumors the EPA could reduce the ethanol mandate by 6% for 2014 and 10% for 2015.
  • Hedge-related pressure as harvest is underway is adding to pressure, although rain-related delays are expected this weekend.
  • However, basis levels have firmed at many Midwest locations today as farmer selling has remained light and some farmers are focusing on soybean harvest first.
  • Selling pressure is being limited by ideas the price break has spurred export demand. While weekly export sales data has not been released, traders expect last week's business to have brought sales between 600,000 MT and 1.4 MMT.
  • Strategie Grains has lowered its 2013-14 EU corn crop forecast by 900,000 MT to 64.9 MMT.

Soybean futures are 2 to 6 cents higher this morning.

  • Corrective short-covering has dominated trading this morning, along with some spreading activity with the corn market.
  • The market is also gaining light support on talk foreign buyers are taking advantage of the U.S. government shutdown to book U.S. soybeans undetected due to lack of reporting.
  • If the weekly export sales data would have been released this morning (government shutdown), traders believe it would reflect business last week between 400,000 and 1.025 MMT.
  • Increased harvest progress as well as strength in the U.S. dollar index are limiting price gains.

Wheat futures are firming after a weaker trade this morning. SRW futures are fractionally higher in the nearbys and fractionally to 3 cents weaker in the deferreds. HRW is fractionally to 2 cents in front months and 1 to 2 cents lower in deferreds. HRS wheat is fractionally to 3 cents higher.

  • Wheat was under light pressure early on news Egypt canceled its wheat tender for at least 50,000 MT due to high prices. That cancellation raises concerns the recent price rally has crimped demand for U.S. wheat.
  • Recent strength in the U.S. dollar index adds to the concern.
  • However, weekly export sales were expected to come in between 300,000 MT and 900,000 MT last week. The report was halted by the government shutdown.
  • Strategie Grains has lowered its 2013-14 EU wheat crop forecast by 300,000 MT to 135.2 MMT.
  • Global crop concerns have also returned buyers to the market. While some producers are expected to resume winter seeding in southern areas of the Black Sea Region, most are expecting acreage reductions from earlier expectations.

Live cattle and feeder cattle futures are slightly higher.

  • Live cattle futures are higher on expectations of higher cash prices.
  • Trader reports indicate bid and asking prices remain at least $5 apart, which signals cash cattle trade may not take place until Friday. Last week, sales took place at $126 on the Southern Plains.
  • Showlists are down at all locations except Nebraska this week.
  • Private reporter Urner Barry indicates Choice beef cuts firmed 33 cents yesterday and estimate today's kill at 122,000 head.
  • The premium futures carry versus cash prices in the Southern Plains is limiting buying interest.
  • The gain in futures also hints the reaction to yesterday's news South Korea will halt some U.S. beef exports was overdone.
  • The market is also benefiting from efforts to tally the death loss of last week's snowstorm in South Dakota. Some estimate losses between 50,000 and 70,000 head.
  • Traders are hesitant to extend positions aggressively due to the lack of information caused by the government shutdown.
  • Feeder cattle are higher on weaker corn prices.

Lean hog futures are slightly lower on light trading.

  • Cash hog bids are mixed with prices in the western Corn Belt seen as steady but prices in Illinois are reportedly $1 lower.
  • Hog runs are seen as rising and packers reportedly are increasing their Saturday kill. Trade sources now project Saturday's slaughter at 150,000 head versus thoughts kill would total 130,000 head earlier this week.
  • Private reported Urner Barry projects today's slaughter at 432,000 head.
  • Urner Barry also reports the pork cutout fell $3.49 yesterday.
  • Traders are concerned yesterday's bearish reversal in December futures and the rush to exit the October contract before the new settlement procedure increases the odds a market top had been made.
  • Strength in the U.S. dollar index is adding to the negative tone.
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