Market Snapshot, 8:30 am CT (VIP) -- November 15, 2012

November 15, 2012 02:40 AM

Outside markets are choppy this morning, but a general flight to safety is being seen as the euro-zone officially slipped into recession and U.S. jobless claims surged to a 1 1/2 year high after Superstorm Sandy. The U.S. stock market is headed for a choppy start, but worries over the fiscal cliff remain heightened.

Corn futures are narrowly mixed in lackluster trade.

  • Price action in the corn pit has been rather lackluster due to a lack of fresh news. Futures haven't strayed too far from unchanged as there's little incentive for traders to add risk this morning.
  • Strategie Grains raised its estimate of the EU's 2012-13 corn crop by 700,000 MT to 53.6 MMT, but said said stocks could tighten given strong demand.
  • 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.
  • Traders are weighing tight supplies and strong demand against expectations for a large South American crop. But given this week's technical chart damage, bulls are hesitant to add long positions.
  • 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. This business strongly suggests U.S. prices are a value.


Wheat futures are favoring a firmer tone in choppy trade.

  • Wheat futures are favoring a firmer tone on news that Strategie Grains has 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.
  • This, combined with concerns about lingering drought in the U.S. Southern Plains is helping limit pressure on wheat futures this morning. The CPC says it expects drought to linger across the HRW Wheat Belt this winter.


Live cattle futures are called mixed as traders wait on cash trade and even positions ahead of the Cattle on Feed Report.

  • Traders are still waiting on cash cattle trade to begin. The lack of bids suggests cash trade will be delayed until after the Cattle on Feed (COF) Report. Expectations are for steady to lower trade given this week's larger showlist and negative packer profit margins.
  • 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.
  • Feeder cattle futures are called mixed in reaction to choppy trade in the corn market.


Lean hog futures are called lower in reaction to softening pork cutout values

  • 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.
  • As a result, the cash hog market is called steady to mostly lower as packers are having no difficulty securing supplies.
  • If futures see followthrough selling from yesterday's losses following contract highs on Tuesday, it would strongly suggest a high has been posted.
  • December lean hog futures are trading at around a $1.50 discount to the cash index. But traders are comfortable with some discount given recent pressure on the pork market.
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