Market Snapshot, Noon CT (VIP) -- October 30, 2013

October 30, 2013 07:03 AM
 

Corn futures continue to trade 1 to 2 cents lower.

  • Corn futures have slipped into negative territory after showing slight gains on corrective buying interest.
  • Funds continue to be heavy sellers on anticipation of further harvest-related hedge pressure, with more than a third of the crop still in the field.
  • Harvest is grinding to a standstill as rains move across the Midwest rains this week. The slowdown in harvest activity has basis levels at interior locations firming.
  • Traders reacted positively initially to a wave of overnight export activity which signals prices are rebuilding demand. But expectations of harvesting a record crop has shifted sentiment back to the negative.
  • South Korean feedmakers purchased 368,000 MT of U.S. corn for March and April delivery, which follows the purchase of 140,000 MT of U.S. corn by another South Korea firm on Tuesday. Taiwan also bought 60,000 MT of U.S. corn overnight.
  • Ethanol production for the week ended Oct. 25 rose 14,000 barrels per day (bpd) to 911,000 bpd. Ethanol stocks fell 538,000 barrels to 14.96 million barrels.
  • Gulf corn basis is firmer in late-morning trading, hinting more export news may be in the works. Basis is 4 cents higher for immediate, January and February delivery, and 2 cents higher for November and December delivery.

 

Soybean futures are 3 to 8 cents higher this morning, with November leading gains.

  • Corrective buying following Monday's sharp break has futures on the plus side today.
  • Reports Gulf soybean basis is 5 cents higher for immediate delivery at midday is supportive. Basis is unchanged for November through February delivery.
  • Basis levels at interior points are reported as steady, as well.
  • Traders also expect tomorrow's Weekly Export Sales Report, which will include three weeks of data, to show exporters took advantage of the government blackout and dollar weakness during the period.

 

Wheat futures are 3 to 4 cents lower in the SRW market, with HRW and HRS wheat fractionally to 3 cents lower.

  • Spillover from the corn pit along with concerns about declining export demand has wheat futures under pressure.
  • Traders are looking ahead to tomorrow's export sales update for the weeks ended Oct. 10, Oct. 17 and Oct. 24 for insight regarding recent demand.
  • Brazil raised its tariff-free wheat import quota by 600,000 MT to 3.3 MMT, which could point to more business for the United States.
  • But countering this is news India has cut its floor price for exports of government wheat by 13%, which will make wheat shipments from the country more competitive.
  • Gulf SRW basis is up 2 cents for December delivery and unchanged for other months.

 

Live and feeder cattle futures are slightly to moderately lower at midday.

  • Profit-taking continues to pressure both live cattle and feeder cattle futures.
  • News from the wholesale beef market continues to support the market. Choice boxed beef rose $1.07 to $205.31 this morning and Select moved $1.94 higher. Also impressive, movement was a respectable 100 loads.
  • Gains in the boxed beef market will help trim packers' losses and should help keep the cash market at least steady with week-ago, even though showlists are up somewhat.
  • Traders are also beginning to more actively even positions ahead of Thursday's Cattle on Feed Report, which is expected to show on-feed at 92.6% of year-ago levels, while Placements and Marketings are expected to be around 100.7% and 104.3% of last year's levels.
  • USDA's (delayed) Cold Storage Report tomorrow is expected to show frozen beef stocks as of Sept. 30 at 431.6 million lbs. -- down 0.5% from the month prior but 1.5% above year-ago levels.

 

Nearby lean hog futures have reversed early gains to trade moderately lower while deferred months are slightly to sharply lower.

  • Profit-taking has pressed futures lower after futures moved to new highs shortly after the open. The wide trading range has traders concerned futures will post a key reversal, which is a key negative technical signal, should futures close near current levels.
  • Pork cutout values declined $1.72 this morning, which is adding to selling pressure. However, movement was a strong 294.6 loads.
  • Cash hog bids are steady to $1 lower as packers are planning a small Saturday kill.
  • Average hog weights in Iowa and southern Minnesota for the week ended Oct. 26 rose 0.7 lbs., but the head count is down 9,000 from the week prior and 45,000 below year-ago numbers.
  • Tomorrow's Cold Storage Report is expected to show frozen pork stocks of 562.1 million lbs. as of Sept. 30, up 4.1% from August but down 10.4% from year-ago.
  • The pork cutout value slipped 36 cents yesterday and movement failed to impress at 321.14 loads. Traders are hoping $200-plus Choice boxed beef values will turn some retailers to cheaper pork.
  • This morning's slump in December lean hogs has brought that contract in line with the cash hog index.
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