Market Snapshot, 8:30 am CT (VIP) -- September 14, 2012

September 14, 2012 03:43 AM
 

The U.S. dollar index has moved to its lowest level since May in reaction to the Federal Reserve's bold plan to purchase $40 billion in mortgage-backed debt each month for an unspecified amount of time. Crude oil is sharply higher and the U.S. stock market is set to extend yesterday's gains.

Corn futures are 4 to 6 cents higher on dollar weakness.

  • Positive outside markets are providing a boost to corn futures, as traders fear a weakening U.S. dollar index could encourage foreign end-users to cover near-term corn needs.
  • Upside potential is being limited by confirmation Argentina will increase its 2011-12 corn exports by 2.75 million metric tons (MMT) to 16.45 MMT.
  • Gulf corn basis is steady this morning.

 

Soybean futures are mostly 9 to 13 cents higher on tight supplies and positive outside markets.

  • Dollar weakness is encouraging widespread commodity buying this morning, and traders also have USDA's tight carryover levels on their minds
  • NOPA reports soybean crush in August at 124.8 million bu., which is below traders' expectations of 128.3 million bushels. However, soyoil stocks of 2.168 billion lbs. came in tighter than expected.
  • Positive technicals are also building, as November beans have posted a strong recovery since violating $17.00 earlier this week.

 

Wheat futures are posting double-digit gains in nearby contracts at all three exchanges.

  • Traders believe weakness in the U.S. dollar index makes U.S. wheat more competitive on the global market.
  • Tightening global stocks are also supportive for wheat futures, as sources say supplies in the Black Sea region are being depleted.
  • Dry conditions in the U.S. Southern Plains and Australia are raising concerns about production prospects.

 

Live cattle futures are called steady to lower on profit-taking.

  • December live cattle are trading at around a $3 premium to this week's $127 cash cattle trade, which raises the risk of end-of-the-week profit-taking.
  • Pressure on live cattle will be limited by positive outside markets, as the Dow Jones Industrial Average is poised to post another day of gains following the Fed's move to stimulate the economy.
  • Feeder futures are called lower in reaction to strength in the grain markets.

 

Lean hog futures are called lower due to building supplies.

  • Weekly pork production is on track for be one of the largest on record due to building seasonal supplies and ongoing sow liquidation.
  • Despite well-in-the-black profit margins, packers have no incentive to raise bids due to plentiful supplies. But cash bids are expected to stabilize today.
  • October lean hog futures are trading at more than a $4 premium to the cash index, which reopens fresh downside risk for the contract.
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