Market Snapshot, 8:30 am CT (VIP) -- September 28, 2012

September 28, 2012 03:39 AM
 

Corn futures surged 20-plus cents higher in reaction to the bullish stocks data.

  • Corn was weaker ahead of the release of this morning's USDA data but quickly surged in reaction to the smaller-than-expected grain stocks data that sets 2011-12 corn carryover at 988 million bu., well below the average trade guess of 1.126 billion bushels.
  • The smaller carry-in figure for 2012-13 provides the market with more of a challenge for rationing demand.
  • December corn extended the decline from the August high overnight, but it is now working on a bullish reversal. But the contract still has a lot of ground to make up in order to secure a near-term low. Today is the last trading day of the month and quarter, which could provide some important technical clues.

 

Soybean futures are choppy with a downside bias, with upside potential limited by the negative grain stocks data.

  • The initial reaction to USDA's Grain Stocks Report was bearish, as it sets 2011-12 carryover at 169 million bu., which was above the average trade guess of 132 million bushels.
  • But soybeans are seeing periods of short-covering on spillover from corn as well as fresh demand news. USDA announced a 180,000-metric-ton (MT) soybean sale to China for 2012-13, reminding the market of the need to slow demand.
  • Outside markets are mostly friendly this morning, as the U.S. dollar index is weaker and crude oil is firmer, although gold is weaker. Traders are also working to even positions as today is the last trading day of the month and quarter.

 

Wheat futures are seeing spillover from the corn market; all three exchanges are posting gains in the teens to 20s.

  • Wheat quickly surged along with corn, as traders reacted to the bullish corn stocks data. The wheat stocks data is also slightly positive, coming in at 2.104 billion bu., which was below the average trade guess of 2.281 billion bushels.
  • Traders say the lower-than-expected wheat stocks estimate suggests stronger-than-expected feed-wheat usage is being realized.
  • Meanwhile, the all wheat crop of 2.269 billion bu. is up 1 million bu. from USDA's August projection and in line with traders' expectations.

 

Live and feeder cattle futures are expected to see a choppy start, with pressure limited by short-covering.

  • Ideas this week's losses are overdone is expected to promote a positive bias due to short-covering as traders even positions ahead of the weekend.
  • But ongoing weakness in the boxed beef market will limit buying interest. Yesterday, Choice boxed beef cuts fell 41 cents and Select declined $1.00, but this encouraged strong movement of 250 loads.
  • This week's cash cattle trade has been light so far, with trade at $123 -- down $3 from last week. Remaining feedlots are hoping for higher bids today.
  • Feeder futures should be pressured by the surge in corn futures.

 

Lean hog futures are called steady to higher on strength in the pork cutout market.

  • Pork cutout values firmed $1.16 yesterday on solid movement of 77 loads, which is expected to encourage packers to secure a large Saturday kill, resulting in steady to $1 higher cash hog bids.
  • Traders are also focused on evening positions ahead of this afternoon's Quarterly Hogs & Pigs Report, which is expected to show All Hogs & Pigs at 100.7%, Kept for Breeding at 99.9% and Kept for Marketing at 100.8% of year-ago.
  • Buying interest for nearby futures, however, could be limited as October futures are trading at around a $3 premium to the cash index.
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