Market Snapshot, 10:00 am CT (VIP) -- October 31, 2012

October 31, 2012 05:05 AM
 

Corn futures extended gains with the open of pit trading. Futures are 4 to 6 cents higher through the July contract; far-deferred months are steady to 2 cents higher.

  • Corn futures are engaging in light short-covering as they prepare for the calendar flip to November this morning, encouraged by positive outside markets and soybean gains.
  • But that is the extent of buying interest as this week has been very light in terms of fundamental news.
  • Planting delays in Argentina and southern Brazil continue to provide light support as it increases the odds more acres will be switched to soybeans and tighten supply prospects.
  • But this is countered by steady to lower Gulf basis levels this morning, which reminds the market of lackluster export demand.

 

Soybean futures continue to enjoy gains around 5 to 8 cents.

  • Soybean futures continue to be supported by signs that demand remains strong in the face of high prices. This indicates rationing is needed.
  • Gulf basis levels were firmer for November delivery and steady for other months. Basis is also strong around the country, signaling tight supplies.
  • And USDA's announcement that China bought 25,000 MT of soyoil for 2012-13 reminds traders of the country's strong soybean appetite.
  • News that deliveries against November soybean futures were at the very top end of the guess range at 500 contracts is limiting gains, as are ideas planting delays in South America will increase bean acres in the region.

 

Wheat futures extended gains along with corn to trade roughly 4 to 7 cents higher, with Chicago wheat leading other locations.

  • Strength in the corn and soybean markets is encouraging buying in wheat futures. Outside markets are another positive influence.
  • Traders are also readying positions in anticipation that this afternoon's Crop Progress Report will show winter wheat emergence remains hampered by dryness on the Plains, particularly in the northwest half of the region.
  • But gains are being kept in check as traders await the results of Egypt's tender for wheat. The U.S. is expected to benefit from tighter global wheat stocks due to production troubles in the Black Sea region and Australia. But this has been slow to occur as others are offering better prices.
  • Meanwhile, the export ban saga in Ukraine continues. Most recently, Ukraine's ag ministry said that "no official document on the export ban has been prepared." Regardless, supplies in the region are dwindling.

 

Live cattle futures are posting slight losses this morning. Feeder cattle futures are mostly moderately lower.

  • Traders are booking some profits as they ready for the calendar flip after a strong close yesterday.
  • An early start of cash cattle trade yesterday in the Southern Plains at $126 to $127, steady to lower compared to the week prior, is also encouraging of this.
  • The market remains on watch for reduced beef demand in the wake of Sandy.
  • But ongoing strength in Choice boxed beef values will limit losses. Yesterday, Choice cuts firmed 67 cents, although Select dropped $1.20. Movement was decent at 163 loads.
  • Strength in the corn market is weighing on feeder cattle futures.

 

Lean hog futures are enjoying slight gains with nearby contracts leading to the upside thanks to followthrough buying.

  • Traders are favoring the upside as they even positions for month-end.
  • Today traders are focusing more on the fact that eastern Corn Belt plants are back in business and are preparing for a large Saturday kill to make up for downtime during Superstorm Sandy rather than the fact that this event may slow pork demand.
  • As a result, early cash hog bids are mostly steady.
  • Yesterday, the pork cutout value slipped 46 cents, but movement was impressive at 134.25 loads.
  • Also supportive is a 0.5 lb. decline in hog weights in Iowa and Southern Minnesota for the week, which signals supplies are not expanding as rapidly as thought.
     
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