Market Snapshot, Noon CT -- (VIP) -- October 7, 2013

October 7, 2013 06:57 AM

Corn futures are 1 to 3 cents higher amid short-covering.

  • Light short-covering continues to boost corn futures as well as spillover support from the wheat market and a weaker U.S. dollar index.
  • Harvest continues to run behind with the recent rains over the weekend slowing harvest even further. Status of harvest is unknown with USDA closed but a Reuters poll of analysts shows they expect harvest was likely 20% complete as of Sunday. Last week, USDA said corn harvest was 12% complete.
  • But that delay is likely only temporary as the forecast calls for an open week for harvest across the Belt. Interior basis will likely feel the harvest pressure once combines start rolling again.
  • Futures gained mild support from news private Brazil-based analyst cut its forecast for Brazil's 2013-14 corn output to 83.6 MMT from 85.1 MMT.
  • USDA announced late morning it will not issue the Crop Production and Supply & Demand Reports scheduled for this Friday.
  • What Gulf corn basis bids are available includes basis in unchanged for November and first quarter 2014 in late-morning trading. Earlier, basis slipped 1 cent for November delivery and 3 cents for early 2014 delivery, suggesting some supplies are moving to market channels.

Soybean futures are mixed, with nearbys favoring a weaker tone.

  • Light profit-taking, spread-unwinding versus corn and weakness in the U.S. dollar index supported soybeans in early trading.
  • Light pressure moved into the market on news Brazil-based analyst Celeres raised its forecast for Brazil's 2013-14 soybean crop on Monday to 86.2 MMT from 85.2 MMT projected a month earlier. The firm indicated higher prices and a favorable exchange rate encouraged acreage expansion.
  • The delayed harvest was slowed by weekend rains slowed harvest, but warm and dry conditions are projected for this week which will restart harvest. Hence traders are reluctant to press the upside due to the anticipated restart of harvest pressure.
  • Traders will get official progress data this afternoon from USDA due to the government shutdown. A private poll of analysts by Reuters found they expect harvest advanced to 22% complete from 11% done the week prior.
  • Traders believe ideas export demand is strong is already factored into prices. It will take confirmation of export sales beyond what's expected to move prices, but that data is lacking due to the shutdown.
  • USDA announced late morning it will not issue the Crop Production and Supply & Demand Reports scheduled for this Friday.
  • Gulf soybean basis is unavailable.

Wheat futures are 4 to 7 cents higher in the winter wheat market, while HRS wheat is up 2 to 4 cents.

  • Prospects of rising demand for U.S. wheat continues to lift U.S. futures. Today's weakness in the U.S. dollar index adds to that support.
  • The planting-delay news out of Russia and frost worries in Argentina are boosting prices as well.
  • Russian private firm SovEcon has lowered its winter grains seedings forecast to 13 million to 13.5 million hectares.
  • Russia's Ag Minister later reported he forecasts winter grains seedings will reach only 13 million hectares.
  • Ideas corn futures may be finding support are also supporting wheat futures.
  • Unlike corn and soybean futures, wheat charts are positive, giving the bulls the upper hand.
  • USDA announced late morning it will not issue the Crop Production and Supply & Demand Reports scheduled for this Friday.
  • Gulf SRW basis is unavailable.

Live and feeder cattle futures are fractionally weaker and feeder cattle futures are slightly weaker.

  • Futures are slightly weaker as traders work to narrow the premium October futures carry to cash prices.
  • The Southern Plains saw cash cattle trade occurring at mostly $126 at all locations last week, which was steady with week-ago prices. Sales at $1 to $2 lower prices took place in the Nebraska dressed market.
  • That trade disappointed traders who expected prices to firm seasonally and worries over demand have appeared as a result.
  • However, traders are reluctant to push prices aggressively in either direction due to the lack of government data. They also continue to look for supplies to tighten seasonally.
  • Private market watcher Urner Barry reports Choice boxed beef values fell 18 cents on Friday, while Select firmed 43 cents.
  • Feeder cattle futures are slightly weaker due to slightly firmer corn market.

Lean hog futures are fractionally mixed.

  • Traders continue to struggle to find useful data to guide their trading. Without the data, they are reluctant to push prices aggressively in either direction.
  • Meanwhile, charts remain favorable, bringing support to the market.
  • Some traders continue to believe USDA's Hogs & Pigs Report did not accurately reflect the impact PEDv is having on hog numbers.
  • Early cash hog bids are steady at most interior points and steady to lower at some terminal markets.
  • Urner Barry's slaughter estimates show last week's kill rose slightly from the week prior.
  • Packers are thought to be enjoying wide profit margins.
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