Market Snapshot, Noon CT (VIP) -- November 5, 2013

November 5, 2013 05:59 AM

Corn futures are 1 to 2 cents lower.

  • Corn futures continue to follow the path of least resistance, which is down. Traders acknowledge low prices are rebuilding demand, but the pace of that pick up in demand is not fast enough to offset the pressure of harvesting a record crop.
  • Traders are unconcerned about the disruption in harvest coming from the precipitation moving across the Corn Belt as USDA reports corn harvest was 73% complete as of Sunday.
  • Spillover from both wheat and soybean futures plus strength in the dollar index are also pressuring corn.
  • Traders continue to prepare for USDA's Crop Production and Supply & Demand Reports due Friday with ideas USDA will raise its crop production estimate.
  • Light support is coming from USDA's announcement that South Korea purchased 140,000 MT of corn and an unknown buyer purchased 126,000 MT of corn -- all for 2013-14 delivery.
  • Gulf basis is 2 cents stronger for immediate delivery, steady for December through February delivery and 3 cents higher for March delivery in late-morning trading.


Soybean futures have extended losses to trade 1 to 7 cents weaker after posting gains in overnight trading.

  • Strength in the U.S. dollar index and concerns about higher harvest figures from USDA this Friday are putting pressure on futures.
  • November futures have traded under key support but failed to trigger sell stops on the initial test.
  • The market is unconcerned about precipitation moving across the Midwest as harvest is 86% complete as of Sunday, according to USDA. That's slightly ahead of the five-year average pace.
  • But Midwest precip and slow farmer selling has lifted basis levels at interior locations.
  • Reports Brazil may raise its biodiesel blend requirement for diesel fuel as soon as January from 5% to 7% is helping to limit pressure as this would imply around 10% more of the country's 2013-14 crop would be crushed and therefore, not exported as raw soybeans.
  • Gulf soybean basis is 3 cents higher for November delivery, a penny stronger for December delivery, 1 cent lower for January delivery and steady for February and March delivery at midday.


Wheat futures continue to trade 4 to 9 cents lower for the SRW market, while losses in HRW and HRS wheat are slightly less.

  • Perceptions the HRW wheat crop is off to a very favorable start and global demand for U.S. wheat is weak has futures under pressure.
  • USDA yesterday raised the amount of winter wheat rated "good" to "excellent" at 63%, up 2 percentage points from the week prior.
  • When these numbers are factored into Pro Farmer's weighted Crop Condition Index, the HRW crop improved 4 points to 364 (0- to 500-point scale) and the SRW crop improved 1 point to 378.
  • And more rain in winter wheat country this week is expected to further boost the condition of the establishing crop.
  • According to official Russian trade data, the country has exported 11.177 MMT of grain the first four months of 2013-14, up 8.5% from year-ago.
  • Gulf SRW wheat basis has turned weaker in late-morning trading with November delivery now down 4 cents and December through March delivery unchanged.


Live cattle futures are slightly higher while feeder cattle futures are enjoying moderate gains.

  • Expectations of steady cash cattle trade this week along with strong wholesale beef prices has cattle futures trading on the plus side this morning.
  • Showlist estimates are heavier at all locations after light trade last week at mostly $132, with a few sales in Texas and Nebraska at $133. Packer profit margins have improved, but are still in the red, which will keep them hesitant on their bids.
  • But the boxed beef market remains at elevated levels, which could help support the cash market again this week.
  • This morning, Choice boxed beef slipped 24 cents, but Select rose 90 cents. Movement remained light at 62 loads, however.
  • The light beef movement keeps traders cautious wary of a top in the product market.
  • Declines in grain futures along with the slightly higher live cattle futures has feeder cattle futures rallying this morning.


Lean hog futures continue to trade narrowly mixed at midday.

  • Market action is very limited today as traders are very uncertain about near-term price direction.
  • The hog market saw major chart damage last week, but yesterday's price action shows some believe prices have dipped "far enough."
  • The cash market is steady to weaker, however. Packer profit-margins remain positive, but rising supplies means they can lower bids for cash hog supplies.
  • The cash hog index is at a slight discount to the December contract.
  • The pork cutout value fell $1.06 this morning, but this encouraged strong movement of 198.9 loads.
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