Market Snapshot, 8:30 am CT (VIP) -- October 16, 2012

October 16, 2012 03:43 AM
 

Corn futures are around 5 cents higher through the July contract amid short-covering.

  • Weakness in the U.S. dollar index is attracting short-covering support for corn futures this morning following yesterday's decline.
  • But limiting buying are signs of demand destruction: Japan purchased 250,000 MT of Ukrainian corn; South Korea and Taiwan are turning to cheaper sources of corn and feed wheat to fill needs; and livestock producers in the Southeast U.S. have confirmed 1.35 MMT of corn purchases from South America.
  • The China National Grain and Oils Information Center now forecasts its 2012 corn crop at a record 201 MMT, lessening odds of active Chinese corn purchases.

 

Soybean futures are 8 to 12 cents higher amid short-covering and support from weakness in the U.S. dollar index.

  • The U.S. dollar index is weaker this morning, which is supportive of buying in the commodity markets and short-covering in soybeans following yesterday's decline.
  • Fresh demand news also suggests end-users view soybean prices as a value. USDA announced soybean purchases of 110,150 MT to unknown destinations for 2012-13.
  • November soybeans have returned above the psychological $15.00 level this morning, but after chart damage yesterday, bears are targeting the bottom of the July 5 gap at $14.78.

 

Wheat futures are mostly 5 to 7 cents higher at all three exchanges on spillover from neighboring markets and the weaker dollar.

  • Wheat is benefiting from short-covering following yesterday's losses, as well as help from corn and soybeans, and weakness in the U.S. dollar index.
  • Yesterday's progress report showed winter wheat planting on track with the five-year average, but emergence lagging the normal pace by six percentage points. Improved moisture in the U.S. Southern Plains is expected to give the crops a boost this week.
  • Traders are still waiting on demand improvements for U.S. wheat, but hope things could turnaround soon as exportable supplies in the Black Sea region are tightening. Ukraine's ag ministry says grain exports from July 1 to Oct. 15 totaled 6.64 MMT, an increase of 73% from last year.

 

Live cattle futures are called to open steady to higher on strength in the beef market.

  • The boxed beef market started the week on solid footing. Yesterday Choice values rose $2.29 and Select rose $1.85 on solid movement of 152 loads.
  • This week's showlist is tighter than last week, which gives feedlots more bargaining power in cash negotiations. No active bidding has been reported yet and cash trade is not likely to begin until late in the week.
  • Strength in the corn market is expected to weigh on feeder cattle futures.

 

Lean hog futures are called to open mixed amid spreading.

  • The pork cutout value rose 83 cents yesterday to keep packers margins solidly in the black. This is supportive for the cash market, but traders suspect the pork product market is nearing a short-term top.
  • The cash hog market is expected to be mostly steady today, as there are plenty of hogs to draw from this week.
  • December lean hog futures hold more than a $4 discount to the cash index, which is expected to result in support for the lead-month contract.
     
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