Market Snapshot, 10:00 am CT (VIP) -- November 14, 2012

November 14, 2012 04:12 AM
 

 

Corn futures softened with the open of pit trading but most contracts are again favoring the upside.

  • A lack of fresh news today encouraged selling at the open of pit trading, but selling interest is light.
  • Spillover from soybeans and recognition of tight supplies is mildly supportive.
  • Outside markets are sending mixed signals as the dollar has moved into positive territory, while commodities are generally firmer.
  • Gulf basis levels were steady this morning, as was the case yesterday. This signals little demand news likely lies ahead.

 

Soybean futures pared gains slightly with the start of the open-outcry session to trade mostly 8 to 15 cents higher through the May contract while farther deferred months are posting lighter gains.

  • Soybean futures are benefiting from fresh demand news today. For one, China purchased 120,000 MT of soybeans for 2012-13. USDA also announced a 40,000-MT soybean oil sale to unknown destinations (suspected to be China) for 2012-13.
  • Traders are optimistic that more such news lies ahead as end-users take advantage of the recent plunge in soybean prices.
  • NOPA soybean crush for October of 153.536 million bu. topped expectations by more than 9 million bu. and represented a 28.2% increase from September and an 8.8% increase over last year. Meal exports rose 116% compared to the previous month and 41.8% over year-ago.
  • But the market is hesitant to do more than correct the market's oversold conditions as planting and early development prospects in Brazil have improved.

 

Wheat futures have softened to mixed trade at all three locations, with Kansas City wheat showing the most strength.

  • Pressure on wheat futures remains limited by ongoing deterioration to the winter wheat crop with little drought relief in sight. Yesterday, USDA showed the condition of the crop rated "good" to "excellent" declined 3 percentage points to 36%. The amount of wheat rated "poor" to "very poor" increased by the same amount to 22%.
  • Meanwhile, uncertainty persists about whether Ukraine will officially cap its exports, though dwindling reports will cause exports from the region to slow regardless of any official decision.
  • FranceAgriMer raised its 2012-13 French soft wheat ending stocks forecast 170,000 MT from October to 1.95 MMT, which is still down 22% from 2011-12.

 

Live cattle futures are posting slight losses in all but the front-month contract, which is marginally higher. Feeder cattle futures are favoring the downside in choppy trade.

  • Considering deeply negative packer margins and much heavier showlist estimates this week, most expect cash trade to take place at steady to lower prices compared with last week's $124 to $126 trade.
  • But any declines in cash prices will be limited by ongoing strength in the boxed beef market. Yesterday, Choice boxed beef values firmed 9 cents and Select was up 88 cents. Movement was also strong at 195 loads.
  • Traders are also readying for Friday's Cattle on Feed Report, which is expected to show On Feed at 94.6%, Placements at 87.3% and Marketings at 102.6% of year-ago levels.
  • Tightening supply prospects for 2013 will continue to limit the market's downside risk.
  • Strength in the corn market and the U.S. dollar index is encouraging some light profit-taking in feeder cattle futures.

 

Lean hog futures are posting slight to moderate losses this morning.

  • Traders are banking profits after the lean hog market traded up to new contract-highs for some nearby futures yesterday.
  • Encouraging this are signs pork demand is softening ahead of the Thanksgiving holiday. The pork cutout value plunged $1.61 yesterday, though this encouraged strong movement of 101.5 loads.
  • While packers are enjoying wide profit margins, ample supplies have resulted in them keeping bids steady to lower again today.
  • February lean hogs have moved into overbought territory after posting a contract high yesterday. This is giving traders additional incentive to book profits.
     
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