Fear Of Going Over 'The Cliff' Eases For Now

November 19, 2012 12:22 AM

What Traders are Talking About:

* Fear of the 'cliff' eases. Concerns the U.S. would fall off the so-called fiscal cliff hit a crescendo last week. Those concerns have eased some as weekend talks between top leaders in Washington were deemed "very constructive." As a result, Asian and European stocks were higher overnight and buying interest returned to commodities. While hopes of a deal that will keep the U.S. from falling off the fiscal cliff have improved, many hurdles lie ahead and the next month and a half will likely have many ups and downs as its unlikely there will be any kind of deal until the 11th hour and it may not turn into anything more than again kicking the can down the road.

The long and short of it: With concerns about the fiscal cliff easing for now, there's a risk-on attitude in the investment world to start the week.

* China halts soybean sales. China's government has temporarily halted state-owned sales of soybeans as it focuses on stockpiling new-crop supplies, according to state-run China National Grain and Oils Information Center. The halting of state-owned soybean sales is expected to improve crush margins and prevent crushers from selling back purchases of state-owned soybeans at the higher price being paid for new-crop supplies.

The long and short of it: The temporary halting of state-owned soybean sales will force crushers to turn their attention entirely to imported soybeans to fill needs, although that has been the case recently anyway as state-owned soybean sales have really slowed over the past month as prices are about the same as imported soybeans.

* Cattle on Feed Report about as expected. USDA's Cattle on Feed Report last Friday showed On Feed at 95%, Placements at 87% and Marketings at 103% of year-ago. Those numbers were virtually in line with expectations. Of note, the Placements number was the lowest figure for October since USDA began its data set in 1996. Simply, there aren't many calves to place in feedlots as numbers are low to begin with and drought forced more animals into feedlots this summer.

The long and short of it: Price reaction from the report data should be limited, although the data does favor far-deferred live cattle futures on spreading action.



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