Market Snapshot, Noon CT (VIP) -- October 22, 2013

October 22, 2013 06:57 AM
 

Corn futures continue to trade mostly 2 to 4 cents lower.

  • Harvest-related hedge pressure continues to weigh on the market as only 39% of the nation's crop has been harvested as of Sunday, according to USDA. That compares to 53% on average. Hedge pressure will likely remain until harvest exceeds the 50% mark.
  • December futures are essentially giving back Monday's gains, but the contract remains within yesterday's trading range.
  • Spillover pressure from soybeans along with continuing reports of yields proving better than expected are also weighing on corn futures this morning.
  • Weather forecasts, which call for snow and cold temperatures this week, along with the 6- to 10-day forecast for unseasonably cool temps and normal to above-normal precip for the Midwest, point to a continuation of the slow harvest pace.
  • Limiting selling pressure are the steep losses in the U.S. dollar index on disappointing September employment data.
  • Gulf basis is unchanged at midday with the exception of January delivery, which is 3 cents stronger. This along with a 1-cent uptick in for November delivery this morning has some traders thinking some value buying may be occurring among exporters.

 

Soybean futures have pared losses to just 2 to 3 cents.

  • Profit-taking continues to dominate trading after November and January contracts closed above the psychologically significant $13.00 mark yesterday. After probing below $13.00, the November contract is testing support at that level.
  • Hedge-related pressure has eased as harvest is well beyond the 50% market. USDA says harvest was 63% complete as of Sunday. This is behind the average pace of 69% complete.
  • Gulf basis rose 3 cents for October delivery and 1 cent for November delivery in late-morning trading. This follows an increase of 1 cent for December delivery and a gain of 6 cents for February delivery in early trading. Traders believe these increases may signal some export business may be in the works.
  • Taiwan purchased 120,000 MT of U.S. soybeans overnight.
  • Also, traders were reminded of strong Chinese demand today as the country's Ministry of Commerce raised its soybean import forecast for October by 2.22 MMT to 5.85 MMT. If realized, imports would be up sharply from September.
  • Losses in the U.S. dollar index are also providing support.

 

Wheat futures continue to trade higher after trending lower overnight. Gains are generally around 3 to 6 cents.

  • Short-covering continues to dominate today's trade along with support from sharp losses in the U.S. dollar index.
  • USDA's first winter wheat condition rating pegged the crop at 65% "good" to "excellent." When the data is plugged into Pro Farmer's weighted Crop Condition Index, it shows the HRW crop at 368 and SRW at 376 (0 to 500 point scale), indicating a strong start to the season.
  • Gulf SRW basis rose 3 cents for October delivery and 1 cent for November delivery in late-morning activity. This follows a 2-cent rise in Gulf SRW basis for immediate delivery this morning, which could hint more export news lies ahead.
  • A flurry of export activity this morning and overnight signals strong wheat demand. Key will be if the U.S. gets any of the business.

 

Live cattle futures are slightly to moderately higher. Feeder cattle futures are moderately higher with the exception of the expiring October contract.

  • Live cattle futures gapped higher at the open on yesterday's surge in wholesale beef prices. The market has since hung onto the opening gains, leaving the gap unfilled.
  • Showlists are listed as tight, as well, which has traders looking for stronger cash cattle prices.
  • Sharp losses in the U.S. dollar index on disappointing jobs data are also supportive.
  • Choice beef is listed at $1.50 higher and Select is $1.72 higher this morning, reports USDA. This follows strong gains in both cuts Monday. However, movement is a slow 78 loads this morning.
  • Weaker corn futures and U.S. dollar index are supporting feeder futures this morning. Buying in the front-month contract is being limited by the premium it holds to the cash index.

 

Lean hog futures are sharply to moderately higher following the gap higher opening.

  • Lean hog futures are higher as the trade works to narrow the December contract's discount to the newly released CME lean hog index that stands at $90.43.
  • The index is higher than expected, signaling cash market losses were overstated in recent weeks.
  • The pork cutout weakened 85 cents this morning following a gain of $1.69 yesterday. Movement is a moderate 164.35 loads.
  • Cash hog bids are steady to lower as the trade continues as supplies are readily available.
  • Hog futures are also benefiting from weakness in the U.S. dollar index.
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