Market Snapshot, 10:00 am CT (VIP) -- September 6, 2012

September 6, 2012 05:05 AM
 

The dollar initially firmed against the euro after the European Central Bank announced it will embark on a bond-buying program to support the euro-zone economy, but it has since retreated. The stock market is also rallying thanks to better-than-expected jobs data. Jobless claims declined more than expected last week and private businesses added 201,000 jobs in August, which was also better than expected.

 

Corn futures are enjoying slight gains of mostly 2 to 3 cents across the board.

  • Futures are benefitting from USDA's announcement that unknown destinations bought 217,424 metric tons (MT) of corn, 184,912 MT of which is for 2012-13. This is the latest sign that exporters are worried higher prices lie ahead.
  • News FC Stone lowered its production estimate to 10.607 billion bu. reminds the market of the tight supply situation.
  • But this is countered by news South Korea purchased 124,000 MT of Brazilian corn, signaling global end-users are seeking cheaper supplies.
  • Conab today raised its 2011-12 export estimate for Brazil by 2 million MT (MMT) to 16 MMT. If realized, this would be an all-time high.
  • Gulf basis levels softened 1 to 6 cents this morning as more supplies are available.

 

Soybean futures have improved to mixed trade with the September through January contracts slightly firmer and deferred months slightly lower.

  • Soybean futures have faced light profit-taking pressure this morning, but this price dip encouraged bargain buying thanks to ongoing production concerns and strong demand.
  • Incentive to book profits was an upside revision to FC Stone's crop production and yield estimates to 2.739 billion bu. and 36.7 bu. per acre, respectively.
  • Also, anticipation of harvest bringing supplies to market has caused basis levels to soften at interior and Gulf locations.
  • Conab left its soybean export estimate for Brazil unchanged at 31.25 million metric tons.

 

Wheat futures have improved to post gains around 10 cents in Chicago and Kansas City while Minneapolis wheat is seeing slightly lighter gains.

  • Ukraine's government and exporters agreed yesterday to cap 2012-13 grain exports at 19.4 MMT, including 4 MMT of wheat. Trade sources expect the wheat tally to be reached by November.
  • This has revived talk Russia will take similar action, though Russia's deputy ag minister reiterated the country has no such plans.
  • United Nations Food and Agriculture Organization (FAO) lowered its world wheat forecast by 2.2% to 663 million metric tons.

 

Live cattle futures are under light pressure this morning, while feeder cattle futures are choppy with nearbys favoring the downside.

  • Traders are booking some profits today as they wait for cash cattle trade to begin. The market appears comfortable with futures at a premium to last week's $122 to $123 trade.
  • Boxed beef values rose again yesterday and movement improved to 255 loads. This strength should give feedlots an edge in cash cattle negotiations, but heavier showlist estimates and deteriorating packer margins add some uncertainty.
  • Feeder cattle traders are booking some profits due to gains in the corn market, but pressure is limited by expectations harvest pressure will limit near-term buying interest in the corn market.

 

Lean hog futures are posting slight to moderate losses this morning.

  • The pork cutout value plunged $2.57 yesterday, although movement was strong. This confirms demand is lagging supplies.
  • While packers are planning a large Saturday kill, expanding supplies and aggressive sow liquidation means they will have no trouble finding supplies. Cash hog bids are lower today.
  • Pressure is being limited by the $4-plus discount nearby contracts hold to the cash index.
     
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