Market Snapshot, 10:00 am CT (VIP) -- October 3, 2012

October 3, 2012 05:04 AM
 

Corn futures are trading mostly 5 to 7 cents lower.

  • Spillover from soybeans and strength in the U.S. dollar index thanks to better-than-expected private sector jobs and non-manufacturing data this morning are encouraging followthrough selling in corn today.
  • Adding to the negative tone, Monsanto announced it expects 2013 seedings of 96 million acres, which is in line with the 2012 growing season's lofty plantings.
  • Traders are also reacting to news FC Stone raised its corn crop estimate to 10.824 billion bu. with an average yield of 123.9 bu. per acre.
  • Gulf basis is steady to firmer for immediate delivery, but weaker for early 2013 delivery.

 

Soybean futures softened with the open of pit trade to trade 10 to 18 cents lower through the July 2013 contract; deferred months are seeing lighter losses.

  • Ongoing harvest and reports of "better-than-expected" yields are pressuring beans.
  • Selling accelerated on news Monsanto expects farmers to increase bean plantings in 2013 to 76.1 million acres.
  • Adding to pressure, FC Stone increased its soybean crop to 2.849 billion bu., with an average yield at 38.2 bu. per acre.
  • Traders are ignoring news China bought 21,000 metric tons of soyoil for 2012-13. This follows rumors yesterday that China was back buying soybeans, despite the fact it is celebrating a holiday this week.
  • Gulf soybean basis is steady this morning.

 

Chicago and Kansas City wheat futures have softened slightly to post losses around 7 to 10 cents. Minneapolis is seeing slightly lighter losses.

  • Wheat is seeing spillover from corn and beans. A firmer dollar is adding profit-taking incentive.
  • Traders continue to await the results of Egypt's wheat tender for 150,000 metric tons (MT) of wheat. It has recently favored the Black Sea region for such purchases, but supplies there are dwindling. Japan also tendered for 120,000 MT of feed wheat today.
  • Adding to pressure is recent rains in the U.S. Central and Southern Plains.
  • Meanwhile, warm, dry weather is hampering establishment of the winter wheat crop in eastern Ukraine and southern Russia.

 

Live cattle futures are enjoying slight gains this morning. Nearby feeder cattle futures are slightly higher while deferred contracts are mixed.

  • Live cattle futures are enjoying some followthrough buying thanks to yesterday's much-welcomed improvement in the boxed beef market. Choice values improved $1.30 and Select firmed 14 cents on strong movement of 211 loads.
  • This ups the odds for at least steady cash cattle trade compared to last week's mostly $123 on the Southern Plains.
  • But negative packer profit margins and heavier showlist estimates add some uncertainty.
  • Feeder cattle futures are benefiting from ongoing weakness in the corn market, though there is uncertainty how long this will last with harvest pressure likely easing soon.
  • Strength in the U.S. dollar index is limiting gains in the livestock sector today.

 

Lean hog futures are steady to moderately higher with nearby contracts leading gains.

  • The pork cutout value surged $3 yesterday amid strong movement of 137 loads. This is providing futures a boost and has strengthened packer profit-margins.
  • This translates to improved packer demand. Early cash hog bids are steady to firmer.
  • The front-month October contract has moved through the psychological $80.00 level this morning, encouraging some technical buying. Traders appear comfortable leaving the contract at a $3 premium to the cash index, signaling they anticipate more cash strength.
  • Hog weights declined the week ended Sept. 29 in Iowa and southern Minnesota compared to the week prior. Plus, this week's kill is expected at 2.34 million head, which is close to year-ago levels. This represents a pullback from recent weeks.
     
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