Market Snapshot, Noon CT (VIP) -- October 29, 2013

October 29, 2013 07:03 AM
 

Corn futures are steady to fractionally lower.

  • After opening slightly higher on light short-covering, futures slumped to their lowest level in three years Monday.
  • Pressure is heavy on corn futures. The CFTC this morning reports speculators built their net short position to a record level the week ended Oct. 8.
  • Traders are shrugging off weather forecasts calling for rain and snow to move into the Corn Belt as early as today and likely keeping farmers out of their fields until week's end.
  • USDA's latest crop progress report shows harvest is 59% complete, which is just 3 percentage points behind the five-year average pace -- hence the low level of concern about a potential harvest delay this week.
  • The market saw light support early on news the China National Grain and Oils Information Center expects the country to import 5 MMT of corn from all sources in 2013.
  • Gulf basis is unchanged in late-morning trading with the exception of a 1-cent decline for February delivery.

 

Soybean futures are 1 to 5 cents higher.

  • Short-covering continues to dominate trading today.
  • Traders are shrugging off a potential delay in harvest this week due to the rain and snow forecast to move across the Corn Belt because USDA yesterday reported soybean harvest was 77% complete as of Sunday.
  • News a top Archer Daniels Midland Co. (ADM) official does not expect the porcine epidemic diarrhea virus (PEDV) to have a major impact on soymeal demand is also providing light support.
  • Gulf basis has moved to unchanged for immediate delivery in late-morning trading after falling 10 cents in early morning trading. Deferred delivery is steady to 3 cents lower.

 

SRW wheat futures are mixed with the front three months around a penny higher; HRW wheat is steady to 3 cents higher; HRS wheat is 4 to 5 cents higher.

  • The stronger U.S. dollar index pressured the SRW market initially, but buying moved back into the market as futures found support at the bottom of the October consolidation range.
  • HRW is gaining light support from a decline in the condition of the HRW wheat crop reported by USDA late yesterday.
  • USDA lowered its "good" to "excellent" rating for the winter wheat crop by 4 percentage points to 61%.
  • Once USDA's crop condition ratings were plugged into our weighted Crop Condition Index, it shows the condition of the SRW crop improved slightly to 377, while the HRW crop dropped 8 points to 360 (0 to 500 point scale; 500 represents an excellent crop).
  • Traders are concerned U.S. wheat priced itself out of the global market earlier this month and are waiting for Thursday's export sales data for Oct. 4-24 to see if this month's slump in the U.S. dollar has stimulated export business.
  • Gulf SRW basis is unchanged for most delivery periods in late-morning trading with the exception of December delivery, which is 2 cents weaker.

 

Live cattle futures are mixed with nearby contracts up slightly and February and April contracts slightly lower. Feeder cattle futures are favoring the upside in choppy trade.

  • Nearby live cattle futures are seeing support from today's surge in wholesale beef prices.
  • USDA reports Choice boxed beef rose $1.10 to $204.22 today while Select rose 79 cents. However, movement was a light 61 loads.
  • Packer cutting margins are still negative although recent gains in wholesale prices are draining the red ink.
  • As usual, cash trade is at a standstill. Showlist estimates are reportedly up slightly from last week at all locations.
  • Traders are also preparing for Thursday's Cattle on Feed Report (delayed due to the government shutdown), which is expected to remind of tight supplies. On Feed as of Oct. 1 is expected to come in around 92.58% of year-ago levels, while Placements and Marketings are seen at 100.67% and 104.31% of year-ago levels, respectively.
  • News Taiwan has detected the feed additive zilpaterol in U.S. beef -- the third such finding in less than a month in Asia -- raises concern about its impact on export demand. Taiwan has a zero-tolerance policy for such feed additives and plans to tighten import scrutiny.
  • Profit-taking is the key feature in October feeder cattle futures but the decline in corn futures is lifting November and later contracts.

 

Lean hog futures are slightly to moderately lower.

  • Lean hog futures continue to see light profit-taking today following Monday's surge.
  • Traders are reluctant to press futures higher as momentum indicators are flashing overbought signals.
  • Selling pressure is coming from this morning's wholesale market report which shows the pork cutout slipped $1.47. Movement is a still-positive 183.1 loads, however.
  • Cash hogs are trading steady to $1 lower as packers are looking ahead to a light Saturday kill. But packers continue to enjoy strong margins.
  • USDA's monthly pork trade data indicates total pork exports for August of 403.594 million pounds. This is down slightly from the month prior and nearly 16 million lbs. below year-ago.
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