Market Snapshot, 8:30 am CT (VIP) -- October 23, 2012

October 23, 2012 03:46 AM
 

Corn futures are mostly 4 to 7 cents lower on lack of fresh news and strength in the U.S. dollar index.

  • The U.S. dollar index is stronger this morning, triggering a "risk-off" day in the commodity sector. Outside markets are weighing on corn futures.
  • Otherwise, there's little fresh news for the market to digest, which is contributing to the weaker tone.
  • USDA reports non-U.S. origin export sales of 270,000 MT of corn for delivery to Mexico for 2012-13 that were previously reported as optional origin.

 

Soybean futures have extended earlier losses to trade 11 to 15 cents lower.

  • A "risk-off" mentality in the commodity markets stems from disappointing corporate earnings, and the U.S. dollar index is stronger on renewed concerns about Spain's economic health.
  • Rains are needed in areas of central and northern Brazil, while southern Brazil is too wet. Corn planting delays could result in a switch to more soybean acres.
  • Downside risk should be limited by recent basis improvement, which has returned more focus to strong demand.

 

Wheat futures are 7 to 11 cents lower on spillover from neighboring markets and dollar strength.

  • The dollar index has returned above the 80.00-point mark and is testing the October high, suggesting a near-term low may be in the works.
  • This is concerning to traders anticipating a near-term increase in U.S. wheat exports due to tightening supplies in the Black Sea region.
  • Yesterday's crop progress data reflected the need for more rain in the Central and Southern Plains, but showed emergence in Kansas, Oklahoma and Texas catching up to the average pace.

 

Live cattle futures are called mixed as traders are cautiously optimistic about rising boxed beef prices.

  • Boxed beef values continue to improve, with Choice values up $1.67 and Select up $1.08 on strong movementof 160 loads to start the week.
  • While the product market is strong, Choice values are approaching the $200-per-cwt. level that has choked demand in the past. As a result, traders are cautious about this week's cash prospects.
  • Yesterday's Cold Storage Report showed beef stocks at the end of September about as expected and down from month- and year-ago levels.

 

Lean hog futures are called lower in reaction to the Cold Storage Report.

  • The Cold Storage Report showed record pork stocks at the end of September. The figure came in around 10 million lbs. above the average pre-report guess and raises concerns about demand.
  • While packer profit margins remain in the black, the seasonal increase in supply is expected to result in steady to weaker cash hog bids this morning.
  • Additionally, the pork cutout value slipped 41 cents yesterday. Traders will be watching the pork market closely for signs the price rally is running out of steam.
     
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