Market Snapshot, Noon CT -- (VIP) -- October 6, 2013

October 9, 2013 06:49 AM


Corn futures are 1 to 2 cents higher.

  • Corn futures are higher on bear-spread unwilling triggered by as recent export news suggests prices are building export demand.
  • The market got early support from reports a private Chinese firm purchased 420,000 MT of U.S. corn last week, which some traders believe signals prices are attractive to exporters. The Chinese official confirming the report says the price it paid for the U.S. corn is around 20% cheaper than domestic Chinese corn prices.
  • Traders are also reacting positively to reports lower corn prices are bringing ethanol plants back on line are also providing light support. However, weekly ethanol production fell 7,000 the week ended Oct. 4 to 868,000 barrels per day.
  • Trimming buying interest is today's strength in the U.S. dollar index and expansion of harvest along with stories of better-than-expected yields.
  • Also limiting buying is news private analytical firm Lanworth raised its 2013-14 U.S. corn production estimate by 225 million bu. to 13.708 billion bu. today. It also raised its world corn production estimate by 4 MMT to 953 MMT, citing larger-than-expected U.S. yields.
  • Conab estimates Brazil's 2013-14 corn crop will be between 78.4 MMT and 79.6 MMT. This would be down from the 2012-13 record-large 81.3 MMT crop.

Soybean futures are fractionally higher in the November contract and 1 to 7 cents lower for deferred contracts.

  • Light follow-through selling from yesterday and unwinding of long soybean-short corn spreads is pressing deferred futures lower.
  • Traders continue to lean to the sell side as reports of better-than-expected yields an anticipation of rising hedge pressure as harvest moves into full force.
  • Technical-related selling is a factors as traders are discouraged by November future's inability to close above the $13.00 level.
  • Adding to the negative tone is news private analyst Lanworth raised its soybean production estimate to 3.160 billion bu. from 3.112 billion bushels. The firm also upped its world soybean crop estimate by 2 MMT to 286 MMT.
  • In addition, Brazil's Conab is forecasting the upcoming soybean crop at between 87.6 MMT and 89.7 MMT. If realized, this would be well above last season's 81.3 MMT crop.
  • Adding support is the lack of farmer selling and prospects of weekend rains delaying harvest.
  • Wheat futures are choppy, favoring the negative side of trade with the exception of HRS futures. SRW futures are unchanged to 4 cents weaker.
  • Wheat futures are seeing some selling pressure due to today's strength in the U.S. dollar.
  • Supporting the market is news Brazil's Conab cut its forecast for the 2013-14 wheat crop by 180,000 MT from last month to 4.77 MMT.
  • Adding to the negative tone are forecasts for dry weather to return to southern Russia which is expected to allow for a resumption of winter wheat seeding.
  • Weakening basis in the Plains following a boost in farmer selling is also contributing to today's negative tone.
  • FranceAgriMer raised its 2013-14 soft wheat export forecast for France outside the EU by 200,000 MT from last month to 11.2 MMT.

Live cattle futures are posting slight losses as feeder cattle futures mark slight to moderate losses.

  • Light selling pressure moved into the market on mews that South Korea is suspending some imports of U.S. beef after finding the feed additive zilpaterol in 22 MT of beef from a Colorado Swift Beef Co. plant.
  • Additionally the CME reported additional deliveries have been posted for the expiring October contract, which traders view as negative to futures.
  • Cash cattle trading is at its usual standstill. Bids reported are at $123 while asking prices are at $128 or higher. Last week, sales took place at $126.
  • Showlists are tighter in most locations this week and Choice cuts firmed 14 cents yesterday according to Urner Barry. This should give feedlots an advantage in negotiations. But futures already have higher cash trade factored into prices, opening the door for light profit-taking.
  • Reports thousands of cattle may have been killed in last week's blizzard in South Dakota is providing some support, however.
  • The boost in corn futures and the slight weakness in live cattle futures are pressing feeder cattle futures lower.

Lean hog futures are moderately lower.

  • Traders continue to move to the sidelines due to the lack of daily market data due to the partial government shutdown.
  • In addition, the CME has announced contingency plans for settling the October futures contract. Uncertainly over how that process will play out is also sending traders to the sidelines.
  • Trade comment suggest hog numbers are on the rise seasonally and retailers feature pork for national pork month. Cash hog bids are mostly steady today as packers are planning a large Saturday kill.
  • What information that is available about the wholesale pork market suggest pork cutout values softened yesterday.
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