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

November 8, 2012 02:50 AM
 

Corn futures are posting slight losses in most contracts.

  • Strength in the U.S. dollar index is limiting buying in nearby corn futures this morning, with corn marking time in a narrow trading range so far this week.
  • Traders are largely focused on evening positions ahead of tomorrow morning's USDA reports. Traders look for USDA to lower the size of the corn crop slightly from last month, although a slowdown in demand is expected to result in a 16-mil.-bu. increase in carryover from last month.
  • The Weekly Export Sales Report showed corn sales of 157,600 MT for 2012-13 and 51,800 MT for 2013-14. Combined, the tally was at the low end of expectations.
  • USDA announced a 152,400 MT corn sale to Japan for 2013-14.

 

Nearby soybean futures are slightly lower, with the rest of the market mostly 1 to 2 cents higher.

  • Strength in the U.S. dollar index is limiting buying and putting light pressure on nearby futures.
  • But focus is largely on position squaring ahead of tomorrow morning's USDA reports. Traders look for USDA to raise the size of the soybean crop by around 31 mil. bu. from last month and for carryover to tick up by 3 mil. bu. to a still-tight 133 mil. bushels.
  • This morning's weekly export sales data didn't provide bulls with any positive news, as sales of 186,400 MT for 2012-13 and 5,500 MT for 2013-14 were well below traders' expectations.
  • Contributing to this week's back-and-forth price action is a more favorable forecast for northern Brazil, as rains are reaching the parched area.

 

Chicago wheat is mostly 2 to 4 cents lower, Minneapolis wheat is down 4 to 6 cents and Kansas City is favoring a weaker tone in mixed trade.

  • Strength in the U.S. dollar and ideas yesterday's gains were overdone is weighing on wheat futures this morning.
  • However, news the Food and Agriculture Organization of the United Nations has lowered its 2012-13 global wheat crop projection by 2.8 MMT from last month to 661.2 MMT keeps crop concerns front-and-center in traders' minds.
  • This morning's National Drought Monitor reflects tough conditions for HRW wheat in the Central and Southern Plains, as drought worsened.
  • This morning's weekly export sales report showed sales of 209,400 MT for 2012-13 and 11,500 MT for 2013-14. Combined, the tally was still below traders' expectations.

 

Live and feeder cattle futures are called lower on weak outside markets.

  • Following yesterday's steep sell-off, the Dow Jones Industrial Average is expected to be slightly higher, but investors remain cautious amid ongoing fiscal cliff negotiations. Strength in the U.S. dollar index is expected to weigh on cattle futures.
  • While the boxed beef market has stabilized this week and movement has been strong, the cash cattle market is expected to be steady to weaker as market-ready supplies are up from last week and packers want to improve deep-in-the-red margins.
  • However, strength in the export market should temper losses. USDA reports weekly beef sales of 19,400 MT for 2012 were up 33% from last week, with South Korea the lead buyer. USDA also reported sales of 800 MT for 2013.
  • Additionally, news Japan's Ministry of Health, Labor and Welfare has decided to relax the rules to allow beef from cattle under 30 months opens the door to further improvement in exports from the U.S. Implementation is the next hurdle.

 

Lean hog futures are called mixed as traders reevaluate positions following yesterday's rally.

  • Following yesterday's sharp gains in nearby lean hog futures as traders worked to narrow the discount December lean hogs hold to the cash index, traders are focused on evening positions.
  • Negative outside markets will limit followthrough buying from yesterday's gains.
  • A steady to lower cash hog market is also a limiting factor for bears, as packers say they are having no difficulty securing needed hogs amid ample supplies.
  • But recent technical improvement in lean hogs favors market bulls. February lean hog futures are challenging summer highs. A move above this level would make contract-high resistance bulls' next objective.
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