Market Snapshot, Noon CT (VIP) -- November 20, 2013

November 20, 2013 06:13 AM
 

Nearby corn futures have seen mixed trade today, but most contracts are fractionally to a penny lower at midday.

  • Pervasive bearish attitudes prevail in corn futures despite continuing news of rising corn demand. The market knows supplies are more than ample to handle the immediate upswing in demand.
  • Futures are also seeing some pressure from the strength in the U.S. dollar index.
  • Reminding the trade of the rebuild in corn supplies is news this morning Lanworth raised its world corn production estimate by 5 MT to 963 MMT. However, it lowered its U.S. corn production estimate from last week to 13.911 billion bushels.
  • Japanese corn imports of 1.185 MMT in September were a 5.2% increase over year-ago, but the U.S. accounted for just 54.6% of this amount, compared to 73.3% of last year's total for September.
  • Ethanol production declined 23,000 barrels per day (BPD) the week ended Nov. 15 to 904,000 bpd. Ethanol stocks also fell 70,000 barrels to 15.08 million barrels.
  • Interior cash bids are firming on the decline in futures, shutoff in farmer selling, decline in shipping costs and near completion of harvest.
  • The Rosario Grains Exchange forecasts Argentine 2013-14 corn planted acreage at 3.87 million hectares.
  • Gulf basis is steady in late-morning trading with the exception of January delivery which is 2 cents firmer.

 

Soybean futures are mixed in light trading.

  • Trading volume is limited today and the market seeks direction.
  • The stronger U.S. dollar index is providing some light selling pressure in nearby futures.
  • Traders know the current U.S. harvest is large and most of it is safely out of the field. Meanwhile, favorable rain in Brazil has removed some concerns over that crop and has the market refocusing on prospects of a record harvest coming from South America next spring.
  • But Lanworth trimmed its world soybean production estimate by 1 MMT to 289 MMT; it also trimmed its U.S. soybean production forecast from last week to 3.264 billion bushels.
  • News Vietnam feedmillers bought 240,000 MT of soymeal from Argentina from April to July is also curbing buying enthusiasm.
  • Gulf basis is 1 cents weaker for immediate delivery and steady for all later delivery periods in late-morning trading.

 

Wheat futures are slightly weaker in all three flavors at midday.

  • Profit-taking and strength in the U.S. dollar index has wheat futures on the defensive.
  • Prospects the winter wheat crop will go into dormancy in good condition weigh on the market along with spillover from the corn market.
  • But selling is being limited by news late-season rains are raising concerns about the quality and yields of the Western Australia wheat crop.
  • Also, USDA announced a 110,000 MT SRW wheat sale to Egypt for 2013-14.
  • Lanworth made no changes to its world wheat production forecast this morning.
  • Gulf SRW basis is unchanged in late-morning trading.

 

Live and cattle futures have softened to trade narrowly mixed, with nearby contracts weaker and deferreds stronger. Feeder cattle futures remain slightly higher.

  • Corrective short-covering is dominating trade today, following the plunge through key support yesterday. The market found buying interest at the uptrend line drawn off the lows since May.
  • Some contracts dipped into oversold territory yesterday, according to the 9-day Relative Strength Index. This has some traders covering short positions, too.
  • Feedlots are asking $132 to $134 for cash cattle this week, which would be steady to higher compared with last week's action. However, packers continue to cut in the red and the boxed beef market continues to slip. December futures already reflect a $2 discount to cash askings.
  • Choice boxed beef values rose 53 cents this morning but Select boxed beef declined 56 cents. However, movement was a strong 162 loads.
  • Short-covering is lifting feeder cattle futures this morning.

 

Lean hog futures are slightly higher with the exception of the December contract, which is slightly lower.

  • Position squaring dominates today's trade as the market has consolidated in recent sessions.
  • Traders are bearish as hog supplies are building both in terms of numbers and weights. Average hog weights in Iowa and Southern Minnesota rose 0.4 lb. last week to a record 281.2 pounds.
  • But strong packer profit margins are helping the market absorb these supplies fairly well, keeping the decline in the cash market gradual. Cash hog bids are steady to lower today.
  • However, the December contract continues to trade at a $2 premium the declining cash hog index, which is building selling pressure on that contract.
  • The pork cutout value fell $1.50 again this morning but this encouraged impressive movement of 327.31 loads.

 

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