Market Snapshot, 10:00 am CT (VIP) -- October 15, 2012

October 15, 2012 05:07 AM
 

Corn futures have softened slightly to trade roughly 8 to 11 cents lower.

  • Spillover from soybeans and the market's inability to build on Thursday's bullish report-inspired gains is encouraging followthrough selling to start the week.
  • The demand side of the balance sheet is garnering more attention with harvest expected to near the final stages in this afternoon's Crop Progress Report.
  • High prices have caused export demand to slow and Southeastern livestock and poultry producers are turning to cheaper South American supplies.
  • Gulf basis levels are down 1 cent for immediate delivery but steady to higher for deferred delivery, signaling tight supplies.

 

Soybean futures are posting losses in the 20s to 30s, with nearby contracts leading the price pressure.

  • Dollar strength and the market's inability to stay above technically supportive prices despite tight supplies is encouraging selling in beans.
  • Harvest pressure and reports of better-than-expected yields add to the negative tone.
  • Traders are viewing weekend rains in some of the soybean areas of Brazil as improving the chances of a record-large South American crop, though more precip is needed. Rains in the seven-day outlook are expected to favor northern soybean areas. Conditions remain too wet across much of Argentina.
  • China imported 4.97 MMT of soybeans in September, up 12.4% from August and 20.3% above year-ago. Through the first nine months of this year, China has imported 44.3 MMT of soybeans, a 17.7% increase from year-ago. With the price of state-owned soybeans in line with global prices, Chinese soybean imports are expected to remain strong.
  • NOPA soybean crush for September came in about as expected at 119.732 million bu., which was down around 5 million bu. from August but up 9.419 million bu. from last year.

 

Wheat futures have softened to post losses around 5 to 7 cents in Chicago and Kansas City while Minneapolis wheat is seeing slightly lighter losses.

  • Spillover from corn and especially soybeans is weighing on the wheat complex. A firmer U.S. dollar index is also pressuring wheat.
  • Plus, the market is growing impatient waiting for tightening global stocks to translate to improved demand for U.S. supplies.
  • Most recently, the U.K.'s farm ministry said the region's 2012 wheat harvest was down 13% this year to 13.3 MMT.
  • Beneficial, heavy rains fell across the Plains and the Midwest over the weekend. This is expected to improve prospects for winter wheat seeding and establishment.

 

Live cattle futures are narrowly mixed with nearby contracts favoring the upside and deferred months weaker. Feeder cattle futures are enjoying moderate gains.

  • Traders are exercising caution to open the week as they remain watchful for a pullback in beef and packer demand and begin to look ahead to Friday's Cattle on Feed Report.
  • Last week, boxed beef movement and price gains were solid, though action Friday did represent a bit of a pullback. Choice cuts rose 36 cents but Select values fell 28 cents and movement was relatively slow at 150 loads.
  • Traders will watch this week's boxed beef action and showlist estimates before forming cash trade assumptions. Last week, trade took place at mostly $125. October futures are below that price, while December futures are near in line with the cash market.
  • Feeder cattle futures are benefiting from weakness in the corn market.

 

Hog futures are under slight to moderate pressure in all but the December contract.

  • Selling pressure is being limited for nearby contracts by the $4-plus discount December hogs hold to the cash hog index along with a mostly steady cash hog market.
  • Packers are enjoying solid profit margins thanks to recent strength in the pork market. This is encouraging them to keep bids mostly steady as they secure supplies needed to keep kill lines full.
  • But if the pork market falters amid rising supplies, the cash hog and futures markets will put in a top as market-ready hog supplies will continue to build into the end of the year.
  • Friday, the pork cutout value slid 66 cents, though movement was decent at 54.75 loads.
     
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