Market Snapshot, 10:00 am CT (VIP) -- October 24, 2012

October 24, 2012 05:07 AM
 

Corn futures slightly extended gains with the start of open outcry trading to trade 5 to 7 cents higher.

  • Corn futures are enjoying spillover support from both soybeans and wheat.
  • Strength in the cash market due to tight supplies and slower farmer selling with harvest in its final stages is also supportive.
  • Also, planting delays due to heavy rains in Argentina could cause farmers to switch more acres to soybeans.
  • But buying interest is also limited as demand from exporters, livestock producers and ethanol manufacturers has been cut by high U.S. corn prices.
  • Nevertheless, China's corn imports for September were up 113% from year-ago.

 

Soybean futures firmed with the open of pit trading. Most contracts are posting gains between 8 and 14 cents.

  • Soybean are enjoying followthrough buying today amid ideas more rationing is needed.
  • Supporting such thoughts is USDA's announcement unknown destinations bought 105,000 MT of beans for 2012-13 delivery this morning.
  • Also, China's General Administration of Customs confirmed what we reported on Oct. 15: the country's soy imports in September were up 20.3% from last year at of 4.97 MMT. For the first nine months of the year, soybean imports are up 17.7% to 44.3 MMT.
  • Basis strength around the country and positive outside markets on signs China's economy may be stabilizing are also supportive.

 

Wheat futures are the upside leader this morning with gains of 13 to 20 cents in most contracts at all three locations.

  • Wheat futures are benefiting from official confirmation from Ukraine's ag ministry that the country will ban exports as of Nov. 15, which was initially reported late last week.
  • This reminded the market that U.S. wheat should eventually see improved export demand due to tightening global stocks.
  • Adding to concerns about tight supply prospects, Australia and the U.S. Southern Plains remain dry. The near-term forecast for the Plains holds little chance for relief.
  • Improved risk appetite and slight dollar weakness is also supportive of commodity buying.

 

Live and feeder cattle futures are enjoying slight gains this morning.

  • Ongoing strength in the boxed beef market is encouraging buying in live cattle futures today. Yesterday, Choice cuts firmed 17 cents and Select values surged $1.81. Movement was again impressive considering lofty prices at 163 loads.
  • Most expect cash cattle trade to take place at higher prices this week, which opens upside potential for nearby contracts that are trading in line to below last week's $127 to $127.50 trade. But with bids and asking prices at least $5 apart, late-week trade is expected.
  • Improvement in outside markets after heavy risk aversion yesterday is also supportive.
  • But the fact that Choice values are just $1.48 short of the $200-per-cwt. level that has dried up demand in the past is making traders cautious buyers.
  • Feeder cattle futures are enjoying corrective short-covering amid spillover support from live cattle.

 

Lean hog futures are narrowly mixed this morning.

  • December lean hog futures are benefiting from light short-covering on ideas the downside was overdone yesterday.
  • But that is the extent of buying interest as signs are building that futures have put in a top.
  • Yesterday the pork cutout value slipped $1.23 but this did encourage strong movement of 114 loads. This tightened packer profit margins.
  • Less profitable margins have kept the cash hog market mostly steady, though building supplies mean a few weaker bids may be seen.
     
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