Market Snapshot, 10:00 CT (VIP) -- November 15, 2012

November 15, 2012 03:49 AM


Corn futures remain choppy with nearby contracts favoring the downside and deferred months the upside amid bull spread unwinding.

  • Broad risk aversion is encouraging light profit-taking in the corn market as fresh fundamental news is lacking. This sentiment stems from poor economic data in Europe and concerns about the U.S. fiscal cliff.
  • Adding to the negative tone, Strategie Grains raised its estimate of the EU's 2012-13 corn crop by 700,000 MT to 53.6 MMT, though it expects prices to rise this winter as demand will outpace supply.
  • Gulf corn basis is steady for nearby delivery, although basis for March shipment is up 2 cents. .

Soybean futures have also been choppy, with nearbys weaker and far deferred months firmer amid bull spread unwinding.

  • Soybean futures continue to chop on both sides of unchanged as traders reevaluate positions.
  • While supplies are tight and the market has recently seen signs of value buying, expectations for a large South American crop, global financial doldrums and major technical damage to the daily soybean chart is limiting investor risk appetite.
  • Any deliveries against the November contract continue to be stopped, signaling strong end-user demand for a limited supply of beans.
  • USDA announced a 32,000-MT soyoil sale to an unknown destination for 2012-13, which follows yesterday's announcement of a 40,000 MT soyoil sale to unknown destinations.

Wheat futures are posting slight gains in most contracts at all three locations.

  • Wheat futures rallied with the open of pit trading amid ongoing concerns about dryness in the U.S. Southern Plains.
  • The National Drought Monitor shows most of winter wheat country missed out on recent precip and the CPC's seasonal outlook calls for drought to linger in this region through February.
  • Also supportive is news Strategie Grains lowered its 2012-13 wheat production estimate by 200,000 MT to 122.7 MMT and pegs world wheat stocks at 159 MMT -- down sharply from year-ago.
  • Also, Japan and Taiwan bought wheat from the U.S. today, signaling demand for U.S. wheat may be picking up due to tightening world stocks.

Live cattle futures are posting slight losses this morning while feeder cattle futures are narrowly mixed.

  • Cash cattle trade is not expected to get underway until late this week as packers are buying for a holiday shortened week and some may wait until after the Cattle on Feed Report Friday before making purchases.
  • Most expect steady to lower prices compared with last week's $124 to $126 trade, as this week's showlist is heavier and packers are cutting in the red.
  • Adding to the negative tone, Choice and Select boxed beef values slid 17 cents and 29 cents, respectively yesterday. Movement was impressive, however, at 240 loads.
  • Traders are also working to even positions ahead of tomorrow afternoon's COF Report, which is expected to show On Feed at 94.6%, Placements at 87.3% and Marketings at 102.6% of year-ago levels.
  • Choppy trade in the corn market is encouraging similar action in feeder cattle futures.

Lean hog futures are off to a choppy start.

  • Pork cutout values dropped $2.55 yesterday, further tightening packers' profit margins. Pork values have fallen $4.40 since last week, strongly suggesting a near-term high has been posted. Softer prices have encourages strong movement, however.
  • Softer margins and the fact that packers are preparing for a holiday-shortened week is keeping the cash market steady to lower today.
  • December lean hogs are hovering just above near-term support at $80.00.
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