Bullish Reaction to USDA October Report Data

October 11, 2012 03:13 AM

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Overnight highlights. Following are highlights of overnight trade and opening calls as of 8:15 a.m. CT:

Corn: 10 to 20 cents higher. Futures are responding to this morning's USDA report with strong gains after USDA trimmed carryover more than expected to 619 million bushels. While USDA's crop estimate of 10.706 billion bu. came in above the average trade guess, the drop in carryover has traders' attention -- especially since futures trended lower into the report.

Soybeans: 20- to 30-plus cents higher. Futures have returned to the top of the recent choppy trading range in reaction to USDA's slightly tighter-than-expected carryover peg of 130 million bushels. USDA's crop estimate of 2.86 billion bu. came in higher than September and above the average trade guess, but USDA raised exports to keep carryover at a very tight level -- reminding the market of the need to ration supplies.

Wheat: 12 to 14 cents higher. Futures are seeing a boost from this morning's USDA reports, as well as spillover from neighboring pits. USDA trimmed carryover to 654 million bu., although this came in above the average trade guess. But more attention is being put on the global stocks situation, as USDA lowered global carryover by around 4.7 MMT from last month; now 26.2 MMT lower than last season.

Live cattle: Higher. Futures are expected to see a boost from expectations of higher cash cattle trade. Packers raised bids yesterday, but so far that hasn't spurred any movement as feedlots want even higher prices. Ongoing strength in the boxed beef market and tighter market-ready supplies this week give feedlots more bargaining power.

Lean Hogs: Steady to higher. Futures are expected to be supported this morning from strength in the pork cutout market, as values improved 96 cents yesterday. Traders suspect a flurry of fresh export business has arrived to support the pork market. The cash hog market is expected to be mostly steady today due to ample supplies, but some packers are raising bids given profitable margins.



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