Market Snapshot, Noon CT (VIP) -- October 1, 2013

October 1, 2013 07:02 AM
 

Corn futures have mildly trimmed losses from earlier to trade mostly 2 to 4 cents lower.

  • Corn futures continue to see lingering pressure from Monday's bearish Quarterly Grain Stocks Report and spillover pressure from losses in soybean futures.
  • The report showed more bushels in storage Sept. 1 than expected, which adds additional supplies to 2013-14 marketing year.
  • Traders are concerned about building hedge pressure as harvest is just getting underway. USDA reports it is just 12% complete as of Sunday. While this raises concerns about the slow-developing crop, weather forecasts still appear favorable for the late harvest.
  • The condition of the U.S. corn crop improved last week according to both USDA's ratings and the Pro Farmer Crop Condition Index.
  • Gulf basis was unchanged for October delivery in late-morning trading, but fired another penny for November delivery following an 8-cent surge in early trading. December delivery gained 6 cents. The basis gains raise hopes for potential demand news on the horizon.
  • Technicals clearly favor bears, however, as December futures hit a three-year low yesterday and deferred months marked new contract lows on bearish reversals following the report, and are showing followthrough today.

 

Soybean futures are 12 to 17 cents lower through the July 2014 contract with nearby contracts leading the losses.

  • Traders remain on the sell side of soybeans following the release of USDA's bearish soybean stocks figure Monday and bearish technical indicators flashed by yesterday's sharp selloff.
  • Contributing to negative attitudes is the 1- to 4-cent drop in Gulf basis for October and November delivery early this morning. October basis remained unchanged in late-morning trade. No other data was available due to the partial government shutdown.
  • USDA this morning announced a 113,000-MT daily soybean sale to China for 2013-14 delivery.
  • USDA's Crop Progress Report yesterday signaled harvest progressed as expected for beans over the last week to 11% complete. Trader concern over delayed harvest is limited as weather forecasts appear favorable for harvest progress.
  • Also, USDA crop condition data translated to a 4-point uptick in the soybean crop on the Pro Farmer weighted Crop Condition Index to 339 (0 to 500 scale).
  • Soybean futures are also feeling selling pressure from the general selloff in commodity futures led by gold and oil this morning over concerns over the budget impasse.

 

Wheat futures are mixed with SRW down 1 to 6 cents, HRW mixed and HRS generally 3 to 7 cents higher.

  • The widespread selloff in commodity futures, which includes heavy losses in soybeans, is limiting buying interest in wheat.
  • The spillover is muting the positive news from USDA's report data yesterday, which showed tighter-than-expected Sept. 1 wheat stocks of 1.855 billion bu. while the all wheat peg from the Small Grains Summary came in just a bit above expectations.
  • Russia cut its September grain exports to somewhere between 2.6 MMT and 2.8 MMT due to stepped-up competition in the Black Sea region. This compares to exports of 3.53 MMT in August. September is typically the peak month for Russian grain exports.
  • The Ukraine Ag Minister this morning indicated heavy rains have slowed winter grain sowing in the Black Sea region and may reduce the area seeded for the 2014 wheat crop by 20%.

 

Live cattle futures are slightly lower. Feeder cattle futures are now slightly higher.

  • The selloff in commodities has spilled over in the live cattle futures this morning.
  • In addition, traders are taking some profits following the recent rise in futures and to reduce risk in the face of the government shutdown.
  • Tighter supplies and rising wholesale prices boosted cash prices $2 to $4 last week. Showlists are again tighter in all locations except Colorado and the boxed beef market posted gains to start the week.
  • But packers are cutting in the red and are trying to resist bidding up for supplies. Extended negotiations are likely.
  • There is no information on wholesale beef prices due to the government shutdown, but meat inspectors are still on the job.
  • Feeder cattle futures are higher on the weakness in corn futures.

 

Lean hog futures are slightly to moderately lower with October futures leading the declines with a near $1 loss.

  • The bearishly viewed Quarterly Hogs & Pigs Report continues to press futures lower, although current hog runs do not square with report data.
  • In addition hog futures are feeling spillover selling due to the general selloff in commodity futures.
  • The cash hog market is steady to weaker in the Iowa/So. Minnesota market, steady to $1 lower in Illinois and steady elsewhere.
  • The pork market got off to a solid start to the week but data is no longer available due to the government shutdown.
  • Cutting margins are strong but packers are reluctant to bid higher for cash hogs as they expect larger supplies will come to the market soon.
     
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