Market Snapshot, Noon CT -- (VIP) -- October 31, 2013

October 31, 2013 07:06 AM

Corn futures are 2 to 3 cents weaker amid dollar strength.

  • Corn futures have slumped despite positive export news. Instead, traders are focused on the rebuild in carryover supplies expected when this year's record corn crop is finally tucked into bins.
  • The weekly export sales data showed much stronger than anticipated corn sales of 4.556 MMT for 2013-14 and 738,000 MT for 2014-15 delivery.
  • USDA also noted that for the week ending Oct. 17, 2013, corn sales for Mexico (1.569 MMT) and unknown destinations (304,800 MT) for delivery during 2013-14 would have been reported as daily sales if the government had been open.
  • USDA also announced a 123,040-MT corn sale to Japan and a 174,000-MT corn sale to South Korea for 2013-14 delivery this morning.
  • Traders are reacting negatively to reports Ukraine's state-run grain firm GPZKU is loading a 70,000 MT cargo of corn for China, the first ever Ukrainian shipment of corn to the Chinese market. Ukraine's ag minister states a total of 120,000 MT of Ukrainian corn would be sent to China by the year-end while an additional 1.0 MMT of corn could be exported to China in the second half of this season.
  • Also pressuring prices is news the International Grains Council raised its forecast for global 2013-14 corn output by 5 MMT to 948 MMT.
  • Gulf basis is 2 cents higher for immediate delivery, steady for November delivery, a penny higher for December delivery and unchanged to January and February delivery.
  • Strength in the U.S. dollar index is contributing to price weakness.

Soybean futures are 5 to 7 cents lower amid dollar strength.

  • Soybean futures are weaker as today's export sales report, while better than expected, is news that's already "baked into the market."
  • Export sales of 4.742 MMT for 2013-14 delivery signals exporters took advantage of the break in the U.S. dollar and the government shutdown by actively booking needs. China accounted for 2.112 MMT of the purchases. Exports in excess of 5.123 MMT also impressed, with China receiving 3.821 MMT of the business.
  • Adding to today's weakness are the gains being posted in the U.S. dollar index.
  • Traders are also factoring in expectations Brazilian farmers, who have begun planting soybeans, will harvest another record crop next spring.
  • Traders are shrugging off any concerns over harvest delays due to this week's rains as harvest is viewed as nearly complete. USDA reported 77% of the crop was harvested as of Sunday.
  • Gulf soybean basis is steady in late-morning trading.

SRW wheat is 4 to 5 cents lower, HRW is 2 to 3 cents lower and HRS wheat is favoring a weaker tone in mixed trade.

  • The surge in the U.S. dollar index and disappointment over USDA's export sales report are pressuring futures this morning.
  • USDA's export sales reports for the three-week period during the government shutdown came in at 1.309 MMT for 2013-14, which met expectations. Traders had hoped exporters had used the "dark" period to increase purchases.
  • USDA did report strong corn export sales during this period, which could help lift wheat demand down the road.
  • News Ukraine's grain exports rose to 1.1 MMT to 3.4 MMT in October from the month prior is also putting light pressure on the wheat market.
  • Adding to selling pressure is news the International Grains Council raised its global wheat production forecast by 3 MMT from last month to 696 MMT.
  • Gulf SRW basis is steady in late-morning trading.

Live and feeder cattle futures are mixed amid pre-report position squaring.

  • Traders are hesitant to push prices sharply in either direction ahead to this afternoon's Cattle on Feed Report.
  • The report is expected to show On Feed at 92.6%, Placements at 100.7% and Marketings at 104.3% of year-ago levels.
  • Light cash cattle trade took place in the dressed market in Kansas yesterday at $212, up $4 from the week prior, while Iowa saw a few pens trade at $132.50 in the live market.
  • Futures continue to trade near the upper part of last week's range.
  • Technical problems have delayed the release of wholesale beef market activities. Higher prices were recorded yesterday afternoon and movement was viewed a positive.
  • Beef export sales for Oct. 3-24 at 55,500 MT reflect strong beef demand.
  • Feeder cattle futures are mixed as well with support coming from the slump in corn prices and expectations the COF Report will show tightening calf supplies.

Nearby lean hog futures are fractionally weaker on building supplies.

  • Profit-taking continues to be the main focus of trading today.
  • Traders note technical signals are suggesting a top may be in place, but bulls note the market has given false topping signals before.
  • December futures have filled the upside gap left on Oct. 25.
  • Technical problems have delayed the release of this morning's wholesale pork market data. The pork cutout value fell $1.58 yesterday, but softer prices encouraged strong movement of 476.79 loads.
  • The cash hog index has slipped on higher supplies. December hogs continue to trade in line with the index.
  • Packers are still enjoying very profitable margins, but they are planning a small Saturday kill. Thus, cash hog bids are steady to lower this morning.
  • Traders are also evening positions to close their books for the month.
  • The market is also readying for the Cold Storage Report that is expected to show frozen pork stocks at the end of September around 562.1 million lbs., up 4% from last month, but down 10% from year-ago.
  • Pork export sales for Oct. 4-24 failed to impress at 23,500 MT.
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