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

October 12, 2012 04:56 AM
 

Corn futures softened with the open of pit trading to trade roughly 8 to 11 cents lower.

  • While downside risk remains limited by USDA's confirmation of tight supplies yesterday, traders are engaging in some profit-taking ahead of the weekend.
  • A reminder that demand destruction has occurred is also encouraging of this. Weekly corn export sales were highly disappointing at just 4,200 MT for 2012-13 and 10,000 MT for 2013-14. Commutative exports this marketing year are running 43% behind year-ago. USDA forecasts exports will lag last year by 25.5%.
  • Spillover from wheat and soybeans is an additional source of pressure.
  • A weaker dollar and improved risk appetite on news consumer sentiment unexpectedly jumped to a five-year high is keeping losses in check, however.

 

Soybean futures softened with the start of open outcry trade to post losses in the upper teens to low 20s in most contracts.

  • Traders are booking profits ahead of the weekend, disheartened by the fact futures were unable to find followthrough buying after strong gains early yesterday.
  • Also, weekly soybean sales of 500,700 MT for 2012-13 and 23,000 MT for 2013-14 came in below expectations.
  • But tight supplies and still-strong export demand will limit the market's downside. Commutative export bookings are running 37% ahead of year-ago; USDA projects exports to be 7% below year-ago levels.

 

Wheat futures are the downside leader this morning with losses in the upper teens to 20s in Chicago and Kansas City. Minneapolis wheat is seeing slightly lighter losses.

  • Traders this morning were reminded of the fact that tightening global supplies have yet to translate to increased demand for U.S. supplies, and they are growing impatient waiting for this to occur. Weekly export sales of 279,900 MT came in below expectations.
  • Early pressure triggered sell stops and accelerated losses.
  • Adding light pressure is news Russian Deputy Ag Minister Ilya Shestakov put the country's grain production at 71.7 MMT. Earlier this week, the Ag Minister Nikolai Fyodorov said grain production would be 70 MMT.
  • But Russia's role in the export market is nevertheless expected to taper into year-end as the country is running out of exportable supplies.

 

Live cattle futures are posting slight losses across the board this morning. Feeder cattle futures are enjoying slight to moderate gains.

  • Yesterday light cash cattle sales took place at $124 to $125 in Kansas and at $125 in Nebraska, but active trade has yet to begin. In the meantime, traders are engaging in light profit-taking. October futures are in line with these prices.
  • Adding to ideas cash trade will take place at firmer prices is news 10 deliveries were made against the the October contract late yesterday, signaling strong demand.
  • Adding support is yesterday's gains in boxed beef prices and a surge in movement. Weekly export sales of 15,100 MT were also solid.
  • Feeder cattle are benefiting from short-covering following yesterday's sharp to limit losses, as well as weakness in the corn market.

 

Lean hog futures are mostly slightly to moderately higher in early trade.

  • Traders are favoring the upside as they even positions ahead of the weekend.
  • Seasonally expanding supplies are resulting in mostly steady cash hog bids this morning, though some weaker bids are possible as packers are thought to be well supplied.
  • But downside risk remains limited so long as strong profit margins encourage packers to keep kill lines full.
  • This is largely dependent upon ongoing pork strength. Yesterday, the pork cutout value rose $1.04 and movement was strong at 85.5 loads.
  • The U.S. Meat Export Federation says analysis of USDA data shows pork exports slipped in August by 6% in volume and 7% in value compared to last year. However, both figures are up compared to the month prior.
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