Market Snapshot, Noon CT (VIP) -- November 19, 2013

November 19, 2013 06:04 AM
 

Corn futures are fractionally to 2 cents higher through the March 2015 contract.

  • Light short-covering, spread unwinding versus soybeans and a weaker U.S. dollar index have corn futures on the plus-side of unchanged.
  • Traders remain negative as they continue to absorb the impact of this year's record crop now that 91% of the harvest is completed, according to USDA. That compares to 86% on average.
  • Concerns still exist due to the EPA's proposal to lower the corn ethanol component of the Renewable Fuels Standard, which could diminish demand for corn.
  • But signs of improved export demand prompted by the fall in prices and the weaker U.S. dollar has traders uneasy about pressing prices lower.
  • Supporting that view is news South Korea tendered to buy 210,000 MT of optional origin corn this morning.
  • Gulf corn basis is steady at midday.

 

Soybean futures remain under pressure and are 1 to 10 cents lower, with January futures leading the decline.

  • Spread unwinding with corn following yesterday's upswing tripped sell stops sitting under Friday's and Monday's lows, sending futures lower.
  • January futures have expanded their trading range and are posting a reversal pattern versus Monday's action should they close at current levels.
  • Traders are shrugging off the weaker U.S. dollar and news China purchased 240,000 MT of U.S. soybeans for 2014-15 delivery, as strong demand is known.
  • However, traders are nervous over talk Chinese importers may be canceling some previous U.S. bean purchases.
  • Gulf soybean basis is steady in late-morning trading after posting strength for first quarter delivery periods in early morning activity.

 

Wheat futures are mixed with SRW up 1 to 2 cents, HRW mostly around a penny higher and HRS narrowly mixed.

  • SRW and HRW futures are getting light support from USDA's unexpected downshift in the amount of wheat rated "good" to "excellent" by 2 percentage points yesterday to 63%.
  • When these numbers were factored into Pro Farmer's weighted Crop Condition Index (0 to 500 point scale), the HRW crop slipped 3 points to 366, while the SRW crop held steady at 380.
  • Gains in the corn market and weakness in the U.S. dollar index are also supportive.
  • The same can be said for yesterday's stronger-than-anticipated export inspections reports and recent export buys by Asian countries.
  • Countering this, however, is news Egypt bought 120,000 MT of Russian wheat today, which reminds of export competition.
  • Gulf SRW basis is steady.

 

Live cattle futures are slightly to moderately lower after gapping lower on the open. Feeder cattle futures have softened to post sharp losses.

  • Live cattle futures continue to trade lower following their gap lower opening.
  • The boxed beef market is lower this morning as well. Choice beef is down 68 cents and Select is down 47 cents. But movement improved to 101 loads.
  • The weaker boxed beef market has traders looking for lower cash action relative to $132 cash trade seen last week. December live cattle are at a discount to that price.
  • Showlist estimates are near steady with week-ago.
  • Anticipation of new COOL rules coming into full force, adding costs at all levels of the cattle industry, is also weighing on the market.
  • Feeder cattle futures are lower on the slump in live cattle futures and strength in corn. Early pressure triggered sell stops.

 

Lean hog futures continue to trade mixed, with most contracts favoring the downside.

  • Light trading and position squaring are the dominant features today.
  • December futures are slightly lower on weaker cash hog bids due to rising supplies. But packer cutting margins remain wide which is limiting the decline in bids.
  • The pork cutout value lost ground this morning following firmer prices yesterday afternoon. The cutout fell $1.70, though movement was strong at 233.85 loads.
  • The lean hog index continues to trade at $2 discount to the December lean hog contract, which is pressuring the front-month contract.
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