Market Snapshot, Noon CT (VIP) -- October 2, 2013

October 2, 2013 07:02 AM
 

Corn futures are fractionally to a penny lower.

  • The corn market continues to favor the downside as early stages of harvest continue to pressure basis in interior points.
  • Adding light pressure is news INTL FC Stone raised its corn crop estimate to 14.150 billion bu. on a national average yield of 158.7 bu. per acre yesterday.
  • Countering that, however, is news Lanworth left its 2013-14 corn production unchanged today at 13.483 billion bu. today.
  • The forecast for rain in the Midwest Thursday through Saturday, possibly including snow in the central Dakotas with high winds has some traders hesitant to press prices lower.
  • The December contract has respected support at yesterday's low, but major technical chart damage has been done this week, which will keep traders leaning to the sell side.
  • Gulf corn basis is unchanged in late-morning trading after rising 2 cents for immediate delivery in early morning trading. The rise may hint at improving demand.
  • Ethanol production the week ended Sept. 27 rose 43,000 barrels per day (BPD) over the past week to 875,000 bpd. Ethanol stocks fell 104,000 barrels to 15.51 million barrels.

 

Soybean futures have trimmed early gains to trade 3 to 5 cents higher.

  • Corrective short-covering continues to dominate trading along. Weakness in the U.S. dollar index is also supportive.
  • Gulf basis for immediate delivery is unchanged in late-morning trade after improving 2 cents earlier this morning. The rise may signal more export demand news is ahead.
  • Traders continue to brush off news INTL FC Stone raised its soybean crop forecast to 3.163 billion bu. on a national average yield of 41.4 bu. per acre.
  • However, Lanworth kept its soybean production peg at 3.112 million bu. today.
  • Some traders are reluctant to press prices lower due to the forecast for heavy rain in the Corn Belt Thursday through Saturday and the possibility of frost in the Dakotas and western Minnesota.
  • Charts remain negative, however, some traders note prices seem to be finding near-term support after retracing 50% of their August to September surge

 

Wheat futures are stronger with SRW up 3 to 5 cents. HRW and HRS futures are u3 to 10 cents through the July 2014 contracts

  • Rising expectations on growing worldwide demand for U.S. wheat continue to lift prices.
  • Futures are getting an additional lift from continuing weakness in the U.S. dollar index.
  • Traders speculate Brazil will buy more U.S. wheat in the months ahead as dry weather in Argentina and recent frost events are thought to have trimmed the crop. Argentina has stopped exporting wheat to build domestic supplies.
  • HRS wheat continues to gain support from ongoing reports protein levels of Canada's spring wheat crop are below year-ago levels.
  • Crop-watcher Lanworth raised its world wheat production by 2 MMT to 706 MMT today on expected production increases in Canada and Australia.

 

Live cattle futures are slightly higher in all but the December contract, which is marginally lower. Feeder cattle futures are posting slight to moderate gains.

  • Traders are reluctant to aggressively press futures higher or lower due to the lack of fresh live cattle and wholesale beef data resulting from the partial government shutdown.
  • Trade sources indicate packers are bidding $123 while feedlots are asking $127. Last week sales took place at $126 on the Southern Plains, which was up $2 from the week prior.
  • Showlists are reported as tighter in all locations except Colorado.
  • But packers are working to improve negative cutting margins. At least steady trade is expected.
  • While the usual USDA data for the boxed beef market is not available, Reuters reports that private sources say wholesale beef prices have improved this week.
  • While cattle normally move higher seasonally at this time, traders are concerned about the impact on beef demand from the furlough of government employees.
  • Weaker corn prices and tight calf supplies continue to lift feeder cattle futures. CME Group announced it has temporarily suspended the feeder cattle index due to the partial government shutdown.

 

Lean hog futures continue to post small gains after a stronger-than-expected start.

  • Corrective buying following the recent sharp selloff is lifting futures today. However, charts are decidedly negative.
  • Light support comes from the discount nearby contracts hold to the last reported level of the CME cash hog index.
  • Cash hog bids are reportedly steady to $1 lower today as most packers have already lined up enough supplies for this week.
  • Traders are moving to the sidelines as daily slaughter and pork cutout data is not available due to the partial government shutdown.
  • CME Group announced it has temporarily suspended the lean hog index due to the partial government shutdown.
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