Sluggish exports weigh on grains at midday

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The corn market was lower by 9 to 10 cents in mid morning trading. It is the end of November, which means that it is First Notice Day for the December contract. Traders were not expecting any delivery notices to be posted against the December contract. Instead, deliveries totaled 246 contracts. Additionally, news of heavy notices for wheat was weighing on that market. Both markets have experienced recent rallies on talk of increased demand. The large notices somewhat puncture that popular view. In recent trading, the December contract was off 8 3/4 cents at $7.42 3/4, March was off 10 cents at $7.48 3/4, and December 2013 traded at $6.33, off 3 1/4 cents.

Soybean prices were sharply lower in mid morning trading, giving back a sizable portion of recent gains. Some of the soybean selling may be linked to strong selling pressure in the corn and wheat markets today on news of hefty First Notice Day deliveries. Soybeans don’t trade a December contract, so there is no comparison to be made for bean deliveries. The deliveries in the other grains raise questions about export demand in general, which was disappointing in the weekly export sales report on Thursday. Further, there are reports overnight of China beginning to contract beans from Brazil. January beans were off 17 cents at $14.31.

Wheat prices are down double-digits in midday trade Friday. A combination of factors is at work. First the International Grains Council came out after yesterday’s close with its first estimate of global wheat acreage for 2013. It put it 2.2% higher than in 2012 and at the highest level in 15 years. Then there was word from India that more than doubled the amount of reserve wheat that country would put on the export market, now offering 4.5 million tonnes instead of just 2 million. And of course, being a Friday, there’s profit-taking activity by speculators after strong gains this week. At midsession, CBOT March wheat was down 18 ¼ cents at $8.67 ¼; KCBT March was down 18 at $9.17 and MGE March was down 11 ½ at $9.39 ¾.

Live cattle futures prices are lower at midday Friday. End-of-month position evening seems to be the main cause of the price weakness. December through June contracts are down hard at midday. Feeder cattle futures are down as well, but the declines are much smaller than those for live cattle. There is still very little activity in the cash market with packers resisting paying more than they paid last week, but steady prices are clearly possible. At midsession, February fed cattle are down $1.52 ½ at $130.57 and March feeders are down 62 ½ at $148.92 ½.

Lean hog futures prices are lower at midday. Some traders are closing out positions for end-of-the-month accounting reasons while others are responding to the decline in the pork cutout value on Thursday. Packer margins have gotten very thin, which will probably slow or stop the steady advances in cash hog prices. Early morning reports show cash bids up a little in Friday morning trade. Declines in corn prices and a decline in the stock market are also putting some pressure on hog prices. The February contract is down 47 cents at $86.65 and April hogs are down 12 ½ at $91.27 ½.

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