Market Snapshot, 10:00 CT (VIP) -- September 11, 2012

September 11, 2012 04:55 AM
 

 

Corn futures continue to enjoy gains around 1 to 2 cents in most contracts.

  • Traders continue to favor the upside as they prepare for what is expected to be a friendly set of USDA reports tomorrow. Pre-report expectations are for USDA to lower its corn production estimate by 376 million bu. from August to 10.403 billion bu. and for it to trim 2012-13 carryover by 32 million bu. to 618 million bushels.
  • Also limiting pressure is some technical buying as December futures continue to respect the key support at the 50-day moving average, which is at $7.83 today.
  • Gulf basis levels are steady to higher this morning (sharply higher for September delivery), signaling tight supplies.
  • Harvest-related hedge pressure will continue to limit gains until half the crop is out of the fields. As of Sunday, USDA says harvest is 15% complete.

 

Soybean futures softened with the open of pit trading to post losses of roughly 8 to 12 cents.

  • Traders are reducing their risk exposure ahead of tomorrow morning's key USDA reports. While these are expected to show very tight bean supplies, the September Crop Production Report has held surprises in the past.
  • Plus, funds' heavy net-long position means a sell-the-fact reaction could be explosive.
  • Yesterday's Crop Progress and Condition Report is an additional source of light pressure as it showed a slight improvement in bean crop ratings and that harvest is 4% complete.
  • Gulf soybean basis is steady this morning.

 

Chicago wheat is favoring the upside in mixed trade. Kansas City and Minneapolis wheat are enjoying slight gains.

  • Light support is coming from ABARES lowering its wheat crop estimate to around 22.5 million metric tons (MT), although it says the supply of wheat available for export "will remain high."
  • News that the Australian Bureau of Meteorology says tropical Pacific Ocean sea surface temperatures are near El Nino thresholds, which could signal below-average spring rainfall for the country is also mildly supportive.
  • Traders are also evening positions ahead of Wednesday's Supply & Demand Report. Traders expect USDA to raise 2012-13 wheat carryover slightly to 709 million bushels.
  • Gains are being limited by news Egypt again favored cheaper alternatives to U.S. supplies in its recent tender for 55,000 MT of Ukrainian wheat, 120,000 MT of French wheat and 60,000 MT of Russian wheat.

 

Live cattle futures are off to a mixed start, while feeder cattle futures are steady to marginally lower.

  • Yesterday, the boxed beef market failed to impress with mixed prices and lighter movement than last week. This is encouraging some light profit-taking.
  • But with the front month contract at just a slight premium to last week's cash cattle trade and tighter showlist estimates this week, traders are hesitant to add short positions.
  • Feeder cattle futures are facing light pressure due to strength in the corn market.
  • Tightening market-ready supplies and a weaker U.S. dollar index are limiting selling in live and feeder cattle futures.

 

Lean hog futures are posting slight to moderate losses in early trade.

  • While some believe a seasonal low in the hog market is near, ongoing weakness in the cash hog market due to plentiful supplies is again putting light pressure on futures.
  • Profitable profit margins are giving packers incentive to keep kill lines full.
  • The pork cutout market continued in its recent downtrend with a 2-cent decline yesterday. However, the softer prices continue to encourage decent movement. Yesterday, 64.75 loads changed hands.
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