Market Snapshot, 10:00 am CT (VIP) -- October 2, 2012

October 2, 2012 05:03 AM
 

 

Corn futures have pared losses to 1 to 4 cents with the start of open-outcry trading.

  • Spillover pressure from soybeans continues to keep corn in negative territory as fresh demand news is lacking today.
  • But losses are being limited by recognition of tight supplies.
  • Plus, hedge-pressure should be easing as harvest advanced to 54% complete as of Sunday. This should also translate to basis improvement.
  • Weakness in the U.S. dollar index is also encouraging some light short-covering.

 

Soybean futures trimmed losses to the teens to low 20s with the open of pit trading.

  • Harvest pressure and reports of "better-than-expected" soybean yields continues to weigh on the soybean market. USDA's reports harvest was 41% complete as of Sunday.
  • The market is also seeing technical selling today as recent declines have pulled prices through key levels of support.
  • Plus, soybean planting is off to a favorable start in Brazil thanks to recent, beneficial rains.
  • Also limiting buying interest are expectations there will be little demand news this week as China is celebrating a week-long holiday.

 

Wheat futures have backed off their lows, but most contracts continue to post double-digit losses at all three exchanges.

  • Spillover from the soybean market is encouraging followthrough selling in wheat today.
  • Also, recent rain has helped U.S. winter wheat planting to move to 40% complete, which is still 3 percentage points behind the five-year average. Twelve percent of the crop has emerged, which compares to 16% on average.
  • Russia hopes to sell 500,000 metric tons (MT) of government intervention wheat stocks by year-end in Siberia, the Urals and the Far Eastern Region. This is a reminder that Black Sea supplies are tightening.
  • News that Ukraine has exported 65% of the 4 million MT maximum of wheat exports for 2012-13 the government and exporters agreed to last month also keeps the tightening supply outlook close at hand.

 

Live cattle futures gapped higher on the open and are slightly to moderately higher. Feeder cattle futures are enjoying moderate gains.

  • Live cattle futures are off to a firmer start this morning thanks to short-covering amid ideas the downside has been overdone recently.
  • But considering that this week's showlist is up 13,000 head over last week and that boxed beef action got off to just a so-so start Monday, that will likely be the extent of buying interest unless beef trade improves.
  • Packers offered $121 for cash cattle yesterday, but feedlots have kept asking prices at $125 or higher. Last week, trade took place at $123 in the Southern Plains.
  • Feeder cattle futures are benefiting from short-covering on weakness in the corn market.

 

Lean hog futures gapped higher on the open and are enjoying slight to strong gains, with nearby contracts leading to the upside.

  • Lean hog futures are benefiting from ongoing improvement in the cash and pork markets.
  • Yesterday, the pork cutout value rose 41 cents amid decent movement of 50.75 loads.
  • Tightening supplies have led to steady to firmer cash hog bids today, despite tightening packer profit margins.
  • Deferred contracts continue to benefit from indications hog supplies will tighten in 2013.
  • A weaker dollar is also friendly this morning thanks to positive auto sales for September.


 

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