Market Snapshot, Noon CT (VIP) -- November 4, 2013

November 4, 2013 06:05 AM
 

Corn futures are fractionally to a penny lower after a mixed trade earlier.

  • Corn futures are seeing light support from gains in soybean futures and slight weakness in the U.S. dollar index this morning, but the pervasive bearishness in corn futures pressed futures to a fresh three-year low in early trading.
  • Futures are gaining some support from today's corn export inspections of 31.316 million bushels, which topped expectations. The strong figure suggests current prices are rebuilding corn demand.
  • But traders remain bearish as they expect USDA will boost the size of this year's record-large U.S. corn crop in Friday's report.
  • Traders are shrugging off forecasts of rain and snow expected the first half of the week for much of the Corn Belt as the pace of harvest is becoming a non-issue.
  • Traders expect this afternoon's update from USDA will show harvest is 71% complete through Sunday. That's even with the five-year average but behind last year's 95% completed.
  • Gulf basis is steady 2 cents stronger for February delivery and steady for other months.

 

Soybean futures have pared gains to trade fractionally to 3 cents higher, with the exception of the November contract that is 4 cents lower.

  • Ideas the downside has been overdone lifted the bean market to start the week, but traders have trimmed those early gains.
  • The market is gaining support from today's export inspections report, which showed a whopping 80.6 million bu. passing inspections. While 3 million bu. below the previous week, the tally is still well above expectations.
  • Despite positive demand news, buying interest will remain limited ahead of USDA's key reports due Friday.
  • This afternoon's harvest update from USDA will be of limited interest as harvest is seen as nearly completed. Traders expect it to show 87% of the harvest completed as of Sunday. This compares to 86% completed on the five-year average and 93% completed last year.
  • Gulf basis is 2 and 6 cents lower for November and December delivery, respectively and steady for January through March delivery. This hints that the wave of strong export news may be waning.

 

Wheat futures are posting 3 to 5 cents losses in all the flavors of wheat this morning.

  • Favorable weather for the winter wheat crop along with disappointing export news has wheat under pressure again this morning.
  • Rain is in the forecast for winter wheat country, which is seen as positive for the just-seeded crop. Traders expect this afternoon's USDA report will show 91% of the crop is seeded, which compares to the five-year average of 90% and 92% last year.
  • The weaker U.S. dollar index is helping to limit selling pressure but the failure of corn to hold early gains is seen as negative.
  • Futures are seeing pressure from today's export inspections report, which confirms U.S. wheat prices are no longer competitively priced on the global market. Inspections came in at 7.146 million bu., down 9.5 million bu. from last week and well short of expectations.
  • Traders are also starting to even positions ahead of USDA's Supply & Demand Report Friday.
  • Gulf SRW basis is steady in late-morning trading.

 

Live cattle futures are narrowly mixed and feeder cattle futures are slightly weaker this morning.

  • Traders are marking time waiting for more signals on the likely direction for the cash market this week.
  • Light trading occurred in the Plains last Friday at $132, which is steady with the previous week. December futures are in line that mark.
  • Traders are concerned a short-term top could be forming if wholesale prices are unable to move higher and help erase some of the negative cutting margins faced by packers.
  • Futures are seeing some support, however, from today's wholesale trade. USDA reports Choice beef rose 70 cents to $205.30, but Select beef weakened 11 cents. Movement was a light 77 loads.
  • Feeder cattle futures are seeing some follow-through weakness due to technical-related selling.

 

Lean hog futures are slightly higher after a choppy start.

  • Lean hogs are finding some light support from the steady cash market.
  • Futures are also seeing some light short-covering after last week's sharp selloff.
  • Packers continue to enjoy wide profit margins, which is giving them incentive to keep kill lines full and bids mostly steady.
  • The pork cutout value is steady this morning with movement jumping to a more moderate 188.68 loads.
  • The December futures are in line with the cash hog index, which is also limiting near-term price direction.
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