Market Snapshot, 10:00 am CT (VIP) -- November 12, 2012

November 12, 2012 04:01 AM
 

Corn futures have softened further and are posting losses around 10 to 13 cents.

  • Spillover pressure from soybeans and a lack of fresh demand news has caused corn futures to soften.
  • Also, traders still have Friday's bearish carryover and production pegs from USDA in mind though this is partially offset by news Japan has stepped up its purchases of U.S. corn due to shipping delays in Brazil.
  • In line with such ideas, Gulf basis levels were steady to firmer last week and this morning. This could signal other importers are making similar decisions.

 

Soybean futures have extended losses to trade 30-plus cents lower in most contracts.

  • USDA surprised the market with larger-than-expected carryover and production forecasts Friday. This continues to weigh on soybean futures and will likely continue to do so until the market sees signs bargain buying is taking place.
  • Early pressure on soybeans escalated losses as sell stops were triggered. Funds significantly lightened their long position last week.
  • Northern production areas of Brazil have received much-needed precip while southern areas that have been too wet are expected to dry out. This improves chances the Brazilian soybean crop will indeed be record-large. Meanwhile, soggy conditions in Argentina increase the odds acres will be switched from corn to beans.
  • According to official Chinese customs data, the country imported 4.03 MMT of soybeans in October, a 19% decline from September, but 6% above year-ago.

 

Wheat futures have extended declines to post losses in the teens at all three locations, with Chicago and Kansas City seeing the heaviest losses.

  • On Friday, wheat futures tested the top of their downtrending channel. As has been the trend, the market reversed course today and is back near the midway point of the range.
  • Spillover from corn and soybeans is adding to the negative tone.
  • The market did not react to USDA's higher-than-expected carryover estimate Friday, but traders are doing so today.
  • But the market's downside risk remains limited by concerns about the U.S. winter wheat crop that is off to an unfavorable start. This is expected to be reflected in tomorrow's crop condition report.

 

Live cattle futures under light pressure this morning. Feeder cattle futures are favoring the downside in mixed trade.

  • Live cattle futures' fundamentals weakened to wrap up last week -- boxed beef prices slid and cash cattle trade took place at mostly lower prices. The market is thus seeing light selling pressure today.
  • Traders will watch this week's boxed beef action and showlist estimates before forming cash cattle assumptions for this week.
  • While supplies are expected to continue to tighten through year end, which should be reflected in Friday's Cattle on Feed Report, packers continue to cut in the red.
  • Outside markets are mildly supportive this morning as the stock market is slightly higher and the U.S. dollar index is slightly lower. This is limiting losses.
  • Weakness in the corn market is limiting pressure on feeder cattle futures.

 

Lean hog are posting slight losses this morning.

  • A few plants are closed in honor of Veterans Day, limiting demand for seasonally expanding supplies. Thus, the cash hog market is steady to lower today, despite strong packer margins.
  • But pressure on nearby contracts is being limited by the discount the December contract still holds to the cash hog index.
  • While the pork cutout value slid 33 cents on Friday, movement was decent at 55.25 loads.
     
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