Market Snapshot, 8:30 am CT (VIP) -- September 26, 2012

September 26, 2012 03:40 AM
 

Corn futures are mostly 5 to 8 cents lower on strength in the U.S. dollar index.

  • Strength in the U.S. dollar index as the European Union sovereign debt crisis is back on the front burner, is weighing on commodity markets this morning.
  • Traders are also more actively evening positions ahead of Friday's key Quarterly Grain Stocks Report that will set 2011-12 carryover. Since this report has resulted in surprises in the past, traders are lightening their long exposure to the market.
  • Ongoing harvest is also providing pressure. But the cash market is holding up well. Gulf corn basis is steady for immediate delivery this morning.

 

Soybean futures are 14 to 18 cents lower amid technical selling.

  • November soybeans dropped to a 12-week low overnight amid stepped-up harvest progress. Next support is the August low of $15.55 1/4.
  • Negative outside markets are weighing on the commodity sector this morning. Strength in the U.S. Dollar index comes amid increased nervousness surrounding the euro-zone.
  • Rains in key areas of Brazil are also adding to price pressure. Rains in Mato Grosso are beneficial to early planted soybeans and will encourage producers to continue planting.
  • On a positive note, USDA announced a 140,000-metric-ton (MT) sale of soybeans to an unknown destination for 2012-13, signaling "value buying."

 

Wheat futures are 4 to 8 cents lower this morning on beneficial rains and spillover pressure from neighboring markets and the U.S. dollar index.

  • Negative outside markets, combined with spillover from corn and soybeans is weighing on wheat futures at all three exchanges this morning.
  • Adding to weakness are beneficial rains in areas of Australia's wheat belt, as well as forecasts for rains across U.S. winter wheat areas that will benefit the newly planted winter wheat crop and encouraging more planting.
  • Traders are also waiting on results from an Egyptian wheat tender. If the country snubs the U.S. once again for Black Sea-origin wheat it would suggest they are gobbling up those supplies while they are available and U.S. prices are not yet competitive.

 

Live cattle futures are called to open steady to firmer on short-covering following yesterday's sharp losses.

  • Live cattle futures are due for a corrective bounce following yesterday's fund-inspired plunge that did some near-term chart damage.
  • But upside potential will be limited to short-covering as yesterday's sharp losses raised expectations for lower cash trade compared with last week's $126 trade. Bids as low as $120 surfaced yesterday, raising expectations cash trade would be delayed until Friday.
  • Boxed beef values were softer again yesterday, but movement improved to 209 loads.
  • Feeder cattle futures are expected to see a lift from weakness in corn this morning.

 

Lean hog futures are expected to be mixed on a combination of followthrough from yesterday's losses and short-covering.

  • Pressure on futures should be limited by expectations for steady to firmer cash hog bids again today as packers are still working to secure this week's needs.
  • But packer cutting margins have tightened considerably as cash bids have climbed faster than the pork cutout value, which was up 46 cents yesterday.
  • The CME lean hog index is projected up $1.02 to $71.37. October hogs hold around a $5 premium to the index.
     
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