Market Snapshot, 8:30 am CT (VIP) -- November 14, 2012

November 14, 2012 02:48 AM
 

Corn futures are fractionally to 2 cents higher on short-covering.

  • Corn is benefiting from spillover support from soybeans as well as corrective short-covering. But buying is limited as there's little fresh news for the market to digest.
  • Outside markets are mildly supportive this morning. The U.S. dollar index is slightly weaker, while crude oil and gold futures are firmer.
  • Gulf corn basis is steady this morning, which is somewhat of a disappointment as traders look for a firmer basis as a sign there's fresh demand on the horizon.

 

Soybean futures have extended gains on fresh demand news and are now posting gains of 10 to 18 cents.

  • Soybean futures extended gains on news China purchased 120,000 MT of soybeans for 2012-13. Traders suspect more business will be announced soon as China takes advantage of the recent price slide.
  • USDA also announced a 40,000-MT soybean oil sale to unknown destinations (suspected to be China) for 2012-13.
  • NOPA soybean crush for October of 153.5 million bu. came in above the top end of expectations. Soyoil stocks of 2.19 billion lbs. were also higher than expected.
  • Soybean futures are due for a short-covering bounce to correct the oversold condition created by the recent selloff. January beans are still below the 30% oversold threshold.
  • Traders still have South American weather improvements on their minds. Rains in northern production areas of central and east-central Brazil have encouraged producers to return to the fields to plant.

 

Wheat futures are mostly 3 to 5 cents higher at all three exchanges on support from deteriorating winter wheat conditions.

  • Yesterday's crop condition report showed more deterioration than traders expected. Our weighted Crop Condition Index shows the HRW crop dropped another 10 points last week, while the SRW crop improved 3 points.
  • Traders are growing impatient waiting on an announcement from Ukraine regarding its export plans. Since wheat exports are nearing the 5.5-MMT threshold, expectations are the government will halt exports.
  • FranceAgriMer raised its 2012-13 French soft wheat ending stocks forecast to 1.95 MMT, up 170,000 MT from October, but still down 22% from 2011-12.

 

Live cattle futures are called to open mixed as traders wait on cash trade to begin.

  • Traders in the cattle pit are waiting on cash cattle trade to begin. Despite strength in the boxed beef market, packers will not likely be willing to raise cash bids given this week's larger showlist.
  • Yesterday, Choice boxed beef values firmed 9 cents and Select was up 88 cents on solid movement of 195 loads.
  • Traders will also begin to more actively even positions ahead of Friday's Cattle on Feed Report. The report is expected to show On Feed at 94.6%, Placements at 87.3% and Marketings at 102.6% of year-ago levels.
  • Strength in corn could weigh on feeder cattle futures, although a choppy tone is expected.

 

Lean hog futures are called to open lower based on weakness in the pork cutout market.

  • Packers saw profit margins tighten considerably yesterday as the pork cutout value dropped $1.61. This raises concerns about demand, as traders are fearful values will continue to soften as pork tries to compete with poultry.
  • The cash hog market is called lower today as packers say they are having no difficulty securing needed supplies.
  • December lean hog futures are trading at around a $1.50 discount to the cash index, which should help to limit pressure, although traders expect the cash market to continue softening.
  • February lean hogs have moved into overbought territory after posting a contract high yesterday. This raises the risk of corrective profit-taking.
     
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