Market Snapshot, Noon CT -- (VIP) -- October 3, 2013

October 3, 2013 06:54 AM

Corn futures are 1 to 3 cents higher in vary narrow trading.

  • Traders are evening positions and moving to the sideways in the wake of the disruption of news flow, such as export sales reports, due to the government shutdown.
  • Rain has moved into the Midwest with heavy amounts noted in eastern Nebraska last night and showers noted across portions of northern Iowa, southeastern Minnesota, South Dakota, Missouri and Illinois. The forecast calls for the rainy pattern to linger through the weekend, hindering harvest on the late-developing crop. Warmer temperatures and dry skies are forecast to follow the weekend precipitation, however.
  • While damage is expected to be minimal, traders are noting that frost is possible in the Dakotas. This is a reminder that this late crop is still vulnerable to a sudden downshift in temperatures..
  • Gulf basis is listed as unchanged in late-morning trading following a decline of 2 cents for immediate delivery earlier this morning and steady to 3 cents higher for later delivery periods..
  • Trade rumors say Asian feedmakers are increasing coverage on the price break but official data is unavailable. However, data released prior to the government shutdown signaled corn prices were rebuilding demand. But overnight export sales activity indicates the U.S. faces competition from South America.
  • Continuing weakness in the U.S. dollar index is supportive but chart patterns remain negative.

Soybean futures are 6 to 13 cents higher with November futures leading to the upside.

  • Weakness in the U.S. dollar index coupled with followthrough buying today after yesterday's corrective gains are lifting futures today.
  • Today's strength has some traders thinking the market could be working on a low while weakness in the U.S. dollar index, which reached an 8-month low, could prompt a shift in money flows into the commodity sector.
  • Some traders are evening positions due to the lack of official export data due to the government shutdown. They worry the lack of export sales data following a big price break may mean they may miss large purchases by exporters. That concern is heightened due to rumors Asian feed buyers have stepped up their purchases.
  • The lack of farmer selling and the likely downshift in harvest activity due to rains now through Saturday has basis levels rising, providing support to the market.
  • Gulf basis is steady in late-morning activity but is rose 1 cent for immediate delivery earlier this morning.

Wheat futures are posting double-digit gains with SRW up 10 to 14 cents, HRW up 9 to 13 cents and HRS up 9 to 11 cents.

  • Trader attitudes continue to shift upward building on attitudes U.S. export prospects are bright due to a weakening U.S. dollar index and crop difficulties experienced by key competitors.
  • Wheat is also getting a boost from the small gains in corn futures.
  • Traders continue to focus on delayed seeding of the winter wheat crop in Ukraine and areas of Russia and concerns about freeze damage in Argentina.
  • Adding to those concerns today are forecasts for frost to hit wheat areas in New South Wales, Australia this weekend.
  • The Food and Agriculture Organization of the United Nations cut its forecast for world wheat output to 704.6 MMT from 709.8 MMT previously.

Live cattle futures are fractionally mixed and feeder cattle futures are seeing light pressure today.

  • Traders are booking profits today following yesterday's gains.
  • But the lack of daily market data due to the government shutdown continues to encourage traders to exit the market.
  • Traders are looking for steady to higher cash prices due to tighter showlists and reports of early week strength in the boxed beef market. But packers continue to bid $123, which is below last week's $126 action on the Southern Plains. Cash negotiations will be delayed even further.
  • Slight improvement in the severity of the drought in Texas and the footprint in Kansas is also limiting selling as improved pasture conditions, if they occur, could lead to further supply tightening ahead.

Lean hog futures are slightly to moderately higher.

  • Ideas the downside was overdone in reaction to last week's Hogs & Pigs Report are boosting futures. Some traders continue to believe the USDA report did not fully account for disease losses due to PEDv.
  • Trading is limited to narrow ranges as traders are reluctant to take aggressive positions due to the lack of daily pork and slaughter data from the government shutdown. Saturday's kill is expected to be down slightly from year-ago.
  • Sources indicate cash hog bids are steady to $1 lower today as many packers are bought ahead on this week's needs.
  • Traders continue to look for the onset of the seasonal upswing in hog supplies and weakness in cash and wholesale pork prices.
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