Market Snapshot, Noon CT (VIP) -- November 16, 2012

November 16, 2012 05:47 AM

Corn futures have improved to trade around a penny higher in nearby contracts, while deferred months are steady to lower.

  • Corn prices firmed as the market learned the Environmental Protection Agency rejected requests to waive the ethanol mandate component of the Renewable Fuels Standard.
  • Light support also comes from news Taiwan will turn to the U.S. to at least partly cover its corn needs after congestion in Brazil's ports delayed shipment of at least 420,000 MT of corn for September to October delivery.
  • But buying interest will remain limited by losses in the soybean market and weekly corn export sales that matched expectations still point to lackluster export demand.
  • The U.S. dollar index is off its highs, but still remains sharply higher.

Soybean futures have moved off their lows to post losses around 6 to 16 cents, with nearbys leading to the downside.

  • News China has canceled orders for 600,000 MT of U.S. soybeans due to unprofitable crushing margins continues to weigh on the bean market.
  • Dollar strength is an additional source of pressure, though improved risk appetite as reflected by gains in the stock market did help soybeans move off their lows.
  • This morning's weekly export sales report of 559,700 MT for 2012-13 and 25,500 MT for 2013-14 topped expectations, but the market has become accustomed to strong weekly sales tallies.

Wheat futures remain roughly 6 to 8 cents lower at all three locations.

  • Wheat futures have been unable to shake pressure from a strong dollar and spillover from the soybean market.
  • This morning's weekly export sales data of 314,600 MT for 2012-13 met expectations, but the tally also reminded the market that U.S. wheat is still struggling to attract export demand, despite dwindling supplies overseas.
  • But dryness concerns in the U.S. Central and Southern Plains will continue to limit the market's downside.

Live cattle futures have improved to narrowly mixed trade. Feeder cattle futures are also narrowly mixed.

  • Cattle traders continue to reduce risk ahead of the weekend and the Cattle on Feed (COF) Report.
  • Cash cattle trade has yet to get underway, signaling it may not take place until after the report release. Expectations are for it to occur at steady to lower prices compared to last week's $124 to $126 trade.
  • Boxed beef prices continued their slide this morning, with Choice cuts falling 10 cents and Select cuts down 80 cents. Movement was impressive, however, at 117 loads.
  • Pre-report expectations for the COF Report are for On Feed to come in at 94.6%, Placements at 87.3% and Marketings at 102.6% of year-ago levels.
  • Weekly beef export sales of 14,800 MT are another source of light pressure, as this is down from recent weekly sales totals.
  • Feeder cattle futures remain choppy as traders weigh economic concerns against recent softness in corn prices, though corn prices firmed ahead of midday.

Lean hog futures are choppy with nearbys firmer and deferred months lower amid bull spreading.

  • The market expects pork demand to improve following Thanksgiving, which is supporting nearby contracts.
  • But the fact that the December contract is now at a premium to the cash hog index is limiting gains.
  • Also, the pork market continues to soften, trimming packer profit margins which, in turn, is weighing on the cash hog market. Cash hog bids are steady to lower today as packers are preparing for a shortened work week due to Thanksgiving.
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