Market Snapshot, Noon CT (VIP) -- October 25, 2013

October 25, 2013 07:15 AM
 

Corn futures are narrowly mixed in choppy trade.

  • Futures activity is very limited today as traders even positions ahead of the weekend. Some traders view this as unusual since hedge-related pressure is normally heavy going into the weekends during harvest.
  • Interior basis levels are reported as holding steady heading into the weekend.
  • Traders are cautious about pressing prices lower as recent export news suggest the combination of lower corn prices and weaker U.S. dollar index are attracting strong export demand.
  • Other traders point to reports of a "better-than-expected" yields and that export news has only been enough to stave off selling pressure.
  • But traders look for harvest-related hedge pressure to ease once harvest passes the 50% completed mark. Harvest may have exceeded that mark this week. USDA will provide an update on harvest progress on Monday. Harvest was last reported 39% complete as of Oct. 20.
  • Corn Belt conditions are expected to be favorably dry over the weekend, but rain and snow is forecast to move into the northern Plains and Midwest early next week.
  • Gulf basis is steady for immediate through November delivery, a penny higher for December delivery, steady for January delivery and 2 cents firmer for February delivery.

 

Soybean futures are 1 to 10 cents weaker this morning, with deferred contracts leading losses.

  • Profit-taking is the main feature ahead of the weekend, stimulated by gains in the U.S. dollar index.
  • Traders are shrugging off confirmation of strong demand. China and Taiwan both made purchases of 120,000 MT of 2013-14 beans this morning.
  • The cancellation of the October Crop Production and Supply & Demand Reports due to the government shutdown means the market is still relying on pre-harvest projections from USDA to form crop opinions; traders are not concerned about rationing supplies.
  • Traders are taking profits as the November contract has failed penetrate the $13.20 resistance area nor has it been able to close above the 50-day moving average which hovers near that price level.
  • Mostly dry conditions in the Corn Belt this week is thought to have helped farmers move into the final stages of harvest. USDA will provide a progress update on Monday.
  • Gulf soybean basis is steady in late-morning trading with the exception of November delivery, which is 1 cents weaker.

 

Wheat futures are 1 to 3 cents following mild gains in early trading.

  • Futures firmed early on reports of gains in basis at the Gulf, which traders saw as a signal of more export business.
  • But futures slipped lower as Gulf SRW basis dropped 9 cents for November delivery in late-morning trading after firming 4 cents this morning.
  • South Korea purchased 55,100 MT of U.S. wheat overnight. Japan also booked some U.S. supplies in its purchase of 38,900 MT of food wheat, though Canada and Australia got the bulk of the business.
  • Futures continue to find support from concerns about frost damage to the Australia wheat crop. There are also production concerns in Argentina, Brazil and the Black Sea region.
  • Russian farmers are expected to hold back on sales of wheat in hopes of higher prices for the month of November as Kazakhstan evaluates the quality of its crop.
  • Futures are seeing some pressure from the return of favorable warmth for the emerging and establishing winter wheat crop on the Southern Plains.

 

Live cattle futures are slightly to moderately higher with December futures posting strong gains. Feeder cattle futures are slightly higher.

  • Strong cash and product prices sent December futures gapping higher at the open. The gap remains open, but some profit-taking has occurred following the opening surge. Other contracts are posting slight to moderate gains.
  • Choice boxed beef declined only 88 cents this morning to $200.19 per cwt. while Select fell 50 cents. Movement was also light at 71 loads.
  • Cash prices ranged from $131 to $134 this week, with the bulk of sales taking place around $132. Last week, trade took place mostly between $129 to $130.
  • Packers, faced with negative cutting margins, will continue to resist high asking prices from feedlots, but supplies are expected to continue to tighten well into 2014.
  • Tyson Foods Inc. has announced it has stopped buying slaughter-ready cattle from Canada due to expenses related to Country of Origin Labeling (COOL). This will likely tighten U.S. supplies further.
  • Feeder cattle futures are stronger on the gains in live cattle futures.

 

Lean hog futures gapped higher on the open and are moderately higher in most contracts.

  • Lean hogs are stronger as the cash hog index continues to hold a premium to the December futures contract.
  • Hogs are also seeing spillover strength from the gap-higher opening in December live cattle futures.
  • News of additional PEDV cases in North Carolina are lifting futures as well, especially the deferred contracts.
  • The pork cutout slipped only 8 cents this morning following a $1.04 rise in the pork cutout value yesterday. Movement this morning improved to 191.42 loads.
  • Cash prices are steady to lower as packers have near-term needs covered and are working on next week's needs.
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