Market Snapshot, 10:00 am CT (VIP) -- September 12, 2012

September 12, 2012 05:10 AM
 

Corn futures are trading around a dime lower in the most active contracts.

  • USDA cut 52 million bu. from its production estimate from last month to put the crop at 10.727 billion bushels. That was not nearly as big of a cut as traders had expected. Thus, futures are under pressure again today.
  • USDA's carryover estimates for both 2011-12 and 2012-13 topped expectations at 1.181 billion bu. and 733 million bu., respectively. Expectations were for old-crop carryover of 1.014 billion bu. And new-crop carryover of 618 billion bushels.
  • Global corn carryover for 2012-13 is an additional source of light pressure as USDA raised its projection by 620,000 metric tons (MT) to 123.95 million metric tons (MMT).
  • But the fact remains that supplies are still seen as tight, which limits downside risk.
  • Emphasizing this, Gulf basis levels are mostly firmer again today.

 

Soybean futures continue to rise. New-crop futures are enjoying 30- to 40-plus cent gains while far-deferred months are seeing gains in the 20s.

  • USDA report data was neutral to friendly for soybeans, which has encouraged traders to build more premium into prices.
  • USDA pegged production at 2.634 billion bu., which was near expectations. Its 2011-12 carryover peg of 130 million bu. And 2012-13 carryover peg of 115 million bu. were mostly neutral. But both represent tight supplies and point to a need for rationing.
  • USDA also trimmed its 2012-13 global soybean carryover projection by 280,000 MT from last month to 53.10 MMT; down from 53.65 MMT in 2011-12.
  • Gulf basis levels were steady to firmer this morning.

 

Wheat futures are roughly 6 to 10 cents lower in Chicago and Kansas City while Minneapolis wheat is seeing slightly lighter losses.

  • USDA's report was slightly friendly for wheat this morning, but the market is taking its cue from corn.
  • USDA left 2012-13 U.S. carryover unchanged at 698 million bushels. Trade had expected USDA to raise carryover by 11 million bushels.
  • USDA's global 2012-13 carryover projection of 176.71 MMT is also slightly positive, as this is a 460,000-MT reduction from last month and 21.93 MMT lower than 2011-12.
  • Jordan purchased 100,000 metric tons of optional origin wheat this morning.

 

Live cattle futures are posting slight losses in all but the front-month contract. Feeder cattle futures are enjoying slight to moderate gains in most contracts.

  • Yesterday, boxed beef prices were again mixed, but this encouraged strong movement.
  • Traders fear that with some packers cutting in the red, such beef prices will make them very reluctant to raise bids. But countering this are ideas packers are in need of supplies and tighter showlist estimates.
  • USDA raised its 2012 and 2013 beef production forecasts slightly from last month as well as its 2012 average cash steer price projection to a range of $120 to $122 per cwt.
  • USDA left its export forecast for 2012 unchanged from August but lowered its 2013 beef export forecast by 100 million lbs. due to tightening supplies.

 

Lean hog futures are enjoying slight gains this morning.

  • Futures are enjoying light short-covering after the pork cutout value rose 96 cents yesterday and movement surged to 172.5 loads. Bulls are hopeful this signals the market is working on a seasonal low. This is keeping cash hog bids mostly steady today.
  • However, cash prices must also rise to signal a low is truly in the works. And this will not be an easy task; this week's slaughter is expected to be a record for September.
  • USDA lowered its 2012 and 2013 pork production forecasts slightly from last month, but it also trimmed its pork export forecast by 50 million lbs. for both 2012 and 2013.
     
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