Market Snapshot, 10:00 CT (VIP) -- September 13, 2012

September 13, 2012 05:03 AM
 

 

Outside markets are in a holding pattern as investors wait on the Federal Open Market Committee's policy statement at 11:30 a.m. CT. Hopes are high the Fed will announce another round of quantitative easing, dubbed "QE3." The U.S. dollar index has plunged recently on expectations for such a move, which is supportive for commodity markets.

Corn futures have turned narrowly mixed.

  • Following yesterday's losses, corn futures have seen periods of light short-covering as the market recognizes supplies are still tight and rationing is still needed.
  • Serving as a reminder of this, this morning's weekly export sales data showed corn sales of 214,800 metric tons (MT) for 2012-13 and 212,500 MT for 2013-14, which were within expectations and a marked improvement from recent weeks.
  • Also, Strategie Grains cut its estimate for 2012-13 corn production in the European Union by 4.3 million MT (MMT) to 53.7 MMT.
  • But this is countered by news the China National Grain and Oils Information Center forecasts Chinese corn imports at around 1 MMT in 2013, which would be down sharply from 5.5 MMT forecast for this year.

 

Soybean futures remain under pressure with most contracts seeing losses of 5 to 8 cents.

  • The soybean market enjoyed strong gains yesterday after USDA confirmed the tight supply situation. Thus, traders are engaging in some light profit taking today.
  • Plus, solid weekly export soybean sales of 628,200 MT for 2012-13 remind the market that significant rationing has yet to occur. This tally met expectations.
  • Weekly soymeal and soyoil sales were also within expectations.
  • While the national average bean basis softened a touch last week, it remains in line with the three-year average. Gulf basis levels were steady to firmer again today.
  • The fact that harvest is underway will limit the market's upside potential over the near-term.

 

Wheat futures are enjoying gains in the range of 2 to 7 cents in most contracts at all three locations.

  • Yesterday's losses in the corn market made it difficult for wheat to find buyers, despite a generally friendly report from USDA.
  • News Strategies Grains cut its 2012-13 soft wheat production estimate for the European Union by 1.7 MMT to 123.6 MMT is also supportive.
  • Expansion of drought across the Plains -- as reflected by the national drought monitor -- is also supportive for wheat futures with winter wheat planting underway.
  • But limiting gains is this morning's weekly wheat export sales of 381,800 MT for 2012-13, which fell short of expectations.
  • Also, news that Egypt bought 235,000 MT of Russian, Ukrainian and French wheat and that Syria purchased 50,000 MT of Black Sea origin wheat reminds the market U.S. wheat is not competitively priced.

 

Live cattle futures have softened to post slight losses in all but the front month. Feeder cattle futures are slightly higher.

  • Cash cattle trade began at $126 to $127 in the Plains late Wednesday -- $2 to $3 above the week prior. But this was already factored into prices, leaving futures vulnerable to profit-taking.
  • But pressure is being limited by firmer boxed beef prices and strong movement yesterday.
  • Weekly beef export sales were also strong at 16,800 MT.
  • Feeder cattle futures are benefiting from ideas a high may be in for the corn market.

 

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

  • A $1.70 plunge in the pork cutout value yesterday has renewed concerns the market is still searching for a low.
  • Plus, this week's hog slaughter is projected at 2.44 million head, which would be a record for September and near the all-time high of 2.47 million head in December 2007.
  • This continues to weigh on the cash hog market; bids are steady to lower today. Nearby futures are at a $2-plus premium to the cash hog index, which is currently at $70.17.
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