Market Snapshot, 8:30 am CT (VIP) -- October 11, 2012

October 11, 2012 03:58 AM
 

Corn futures surged following USDA's report and are currently posting 20-plus cent gains in the December through July contracts.

  • USDA trimmed 2012-13 carryover more than expected to 619 million bushels. While USDA's crop estimate of 10.706 billion bu. came in above the average trade guess, the drop in carryover has traders' attention -- especially since futures trended lower into the report.
  • USDA trimmed its global 2012-13 corn carryover projection by 6.68 MMT from last month to deepen the decline from last season.
  • A drop in the U.S. dollar index is adding to bulls' fire this morning, as this has resulted in widespread buying in the commodity world this morning.
  • December corn futures are pivoting around resistance at the October high of $7.67 1/2. A high-range close would be a positive technical development.

 

Soybean futures are 20-plus cents higher in reaction to USDA's report data.

  • USDA's crop estimate of 2.86 billion bu. came in higher than September and above the average trade guess, but USDA raised exports to keep carryover at a very tight level -- reminding the market of the need to ration supplies.
  • USDA raised its global 2012-13 soybean carryover projection by 4.46 MMT, which is now 2.77 MMT higher than last season.
  • Negative outside markets are adding extra incentive to extend long positions after a period of lightening long exposure to the market.
  • November soybean futures have moved off the session high, hovering around $15.50 to remain in the upper region of the recent choppy consolidation range.

 

Nearby wheat futures at all three exchanges are mostly around 7 to 10 cents higher on spillover from neighboring pits.

  • USDA trimmed 2012-13 wheat carryover by 44 million bu., and the projection came in above the average trade guess.
  • USDA lowered its global 2012-13 wheat carryover projection by 4.71 MMT, which is now 26.17 MMT below last season.
  • A weaker dollar and strength in the corn and soybean markets is providing additional buying incentive in the wheat market.
  • December Chicago wheat futures have moved off the session high, but are trading above yesterday's high after slipping below yesterday's low earlier.

 

Live cattle futures are called to open higher on cash expectations, with feeders expected to be pressured by strength in the corn market.

  • Packers raised bids yesterday, but so far that hasn't spurred any movement as feedlots want even higher prices. Ongoing strength in the boxed beef market and tighter market-ready supplies this week give feedlots more bargaining power.
  • Feeder futures are called lower based on sharp gains in the corn market.
  • USDA lowered its 2012 and 2013 beef production projections from last month to reflect a tightening supply situation. USDA made little change to its price forecasts and it left its export projections unchanged.

 

Lean hog futures are called steady to higher based on strength in the pork cutout market.

  • Lean hog futures are expected to be supported this morning by strength in the pork cutout market, as values improved 96 cents yesterday to lift packers' profit margins. Traders suspect a flurry of fresh export business has arrived to support the pork market.
  • The cash hog market is expected to be mostly steady today due to ample supplies, but some packers are raising bids given profitable margins.
  • USDA raised its 2012 and 2013 pork production projections from last month but made little change to its price projections. USDA left its 2012 pork export projection unchanged, but raised its projection for 2013.
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