Market Snapshot, 8:30 am CT (VIP) -- October 9, 2012

October 9, 2012 03:43 AM
 

Corn futures are 2 to 5 cents higher on short-covering.

  • Corn is enjoying light short-covering to erase yesterday's losses despite strength in the U.S. dollar index.
  • The dollar is reacting to news the International Monetary Fund has cut its global growth forecast, although it said it doesn't expect a hard landing in China.
  • Traders are focused on evening positions ahead of Thursday's USDA reports, which are expected to show a smaller corn crop and tighter 2012-13 carryover than last month.
  • Gulf corn basis is 1 to 4 cents lower for nearby shipment, which reflects demand destruction. But basis has firmed for deferred shipment.

 

Soybean futures are mostly 15 to 17 cents higher on pre-report positioning.

  • Soybeans have more than reversed yesterday's losses, with traders focused on evening positions ahead of Thursday's USDA reports which are expected to reflect a smaller crop and drop in carryover to very tight levels.
  • Brazil's government sees record soybean plantings and record production this year. Conab put its initial 2012-13 crop projection at 82.8 MMT.
  • China's government will auction 400,000 MT of soybeans on Thursday in an attempt to stabilize domestic prices. Despite these auctions, China has remained an aggressive buyer of U.S. supplies.
  • China's central bank has injected more money into its economy to improve economic activity, but this hasn't calmed investors' concerns about a slowdown in its economy.

 

Nearby wheat futures at all three exchanges are 6 to 8 cents higher, with deferred futures favoring a firmer tone in mixed trade.

  • Wheat futures are firmer on spillover support from corn and soybeans, as well as global crop concerns.
  • Australia says the chances of El Nino developing have been reduced and the Indian Ocean Dipole is in a positive event. This increases the risk of drier conditions for key wheat areas in the country.
  • Russia's ag minister said the country will harvest 40 MMT of wheat and reiterated his opposition to using grain export restrictions.
  • Traders expect USDA to trim 2012-13 U.S. wheat carryover in Thursday's report and will be watching the global balance sheets for supply reductions.

 

Live cattle futures are called to open steady to firmer amid tightening supplies.

  • Live cattle futures are expected to see a boost from tightening supplies, which gives feedlots more bargaining power in cash negotiations.
  • Choice boxed beef values were 58 cents firmer and Select rose 78 cents yesterday on moderate movement of 138 loads.
  • But negative outside markets will limit buying interest in live cattle futures.
  • Feeder futures are expected to be pressured by strength in the corn market.

 

Lean hog futures are expected to open with a mixed tone, with buying limited by mostly steady cash hog bids.

  • Packer demand for cash hogs remains solid, but a seasonal increase in supplies has packers protecting profit margins. As a result, cash bids are expected to be mostly steady.
  • The pork cutout value started the week 2 cents higher, which has traders talking about the possibility of the market reaching a seasonal high. Only 20.5 loads of product changed hands yesterday.
  • October lean hog futures are trading at around a dollar premium to the cash index. But December hogs, which will soon be the lead-month contract, are trading at around $3.50 discount to the index.
     
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