Market Snapshot, Noon CT (VIP) -- October 14, 2013

October 14, 2013 07:08 AM
 

Corn futures are posting fractional gains at midday.

  • Spillover strength from soybeans is helping to lift corn futures this morning.
  • A weaker U.S. dollar index is also adding to the light short-covering.
  • Traders are looking at the already-late harvest being delayed as rains are forecast to move across the Corn Belt the first half of the week.
  • Private analysts peg harvest progress at around 25% to 35% complete, but no official figure will be available due to the government shutdown. Regardless, harvest is beginning to ramp up and harvest-related hedge pressure will dampen the market near-term.
  • China National Grain and Oils Information Center (CNGOIC) says the country's corn production will likely rise 4.6% over year-ago to 215 MMT -- a record-large crop.

 

Soybean futures are 5 to 8 cents higher at midday. Traders have trimmed early gains.

  • Rumors China is buying U.S. soybeans are lifting soybean futures this morning. Adding to the speculation is the lack of official confirmation due to the continuing government shutdown.
  • Adding to today's strength is a weaker U.S. dollar index.
  • Through the first nine months of this calendar year, China has imported 45.75 MMT of soybeans, a 3.3% increase from year-ago. But the country imported 4.7 MMT of soybeans in September, down 26.2% from August and 5.4% below year-ago.
  • CNGOIC forecasts this year's Chinese bean production at 12.5 MMT, which would be down 4.2% from last year.
  • Gulf basis fell a penny for immediate delivery this morning, signaling harvest activity is making supplies more readily available.
  • But a slow harvest pace in the western Corn Belt led to increases in basis at some western Iowa and eastern Nebraska locations today. In eastern locations, where harvest has been more active, basis continues to slide.
  • Rains in the forecast for Brazil's main production regions this week could help harvest efforts, which have been delayed due to a dry September.

 

Wheat futures are mixed with SRW futures 1 to 4 cent weaker and HRW wheat favoring the downside in mixed trade. HRS wheat is also choppy.

  • Forecasts of precipitation for most of the Southern Plains is seen as a positive for the recently planted HRW wheat.
  • But early pressure has given way to some short-covering as the market remains aware of strong demand for U.S. wheat.
  • Some HRW and HRS contracts are seeing support from the weaker U.S. dollar index and spillover strength from both corn and soybean futures.
  • Ukraine's grain exports from July 1 to Oct. 14 are at 7.4 MMT, which is up 13% from last season thanks to higher wheat shipments, the country's ag ministry reports.
  • As of Oct. 14, Ukraine has harvested 44.5 MMT of grain, which is up 16.5% from year-ago at that time.
  • Meanwhile, China says it will raise the price it pays farmers for wheat in 2014 by 5% in hopes of raising production.

 

Live cattle futures are slightly to moderately higher, while feeder cattle futures have softened to post slight losses.

  • Cattle futures are getting a slight boost from Friday's cash cattle trade, which took place at $2 higher prices in Texas and Kansas and steady to $2 higher relative to the week prior in Nebraska.
  • Private reporter Urner Barry is calling for cattle slaughter today of 121,000 head versus 119,000 a week ago and 124,409 a year ago.
  • Packer cutting margins are well in the red, which will make them resist lifting their bids.
  • Futures already hold a premium to the cash market, which is limiting further strength in futures.
  • Feeder cattle futures have weakened on the strength in corn and soybean futures. The market is also seeing some profit-taking after its record-setting run-up last week.

 

Lean hog futures continue to post slight losses at midday.

  • Trade volume remains sharply reduced due to unease regarding the settlement process for October lean hogs and the lack of government price and volume data.
  • Remaining market participants point to technicals, which hint a top is likely in place.
  • Supplies are rising seasonally, with private reporting firm Urner Barry calling for daily slaughter of 431,000 head versus 429,000 head a week ago and 435,758 a year ago.
  • Cash hog bids are mixed today, with eastern locations paying lower prices and western locations paying higher prices. Packers are still enjoying solid profit margins.
  • Urner Barry data indicates the pork cutout value rose marginally on Friday.

 

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