Market Snapshot, Noon CT (VIP) -- November 19, 2012

November 19, 2012 05:59 AM


Corn futures have built on early gains to trade double-digit higher in most contracts.

  • Outside markets are highly supportive of commodity buying today.
  • Corn is also benefiting from a 12- to 18-cent surge in Gulf basis for November through February delivery this morning. This signals exporters are buying tight U.S. corn supplies.
  • Adding to ideas export demand for U.S. corn will soon improve are shipping delays of at least 1.5 MMT of corn from Brazil. This has already translated to increased buying of U.S. corn by Asian buyers, with more expected to follow.
  • Corn is also benefiting from weekly export inspections of 14.35 million bu., which topped expectations and improved over week-ago.

Soybean futures have pared gains slightly to trade 9 to 13 cents higher.

  • Friendly outside markets and ideas the downside has recently been overdone are supporting the soy complex today.
  • China says it will temporarily suspend auctions of soybeans from state reserves as it starts to stockpile new-crop soybeans. Traders are hopeful this will translate to improved export demand for U.S. supplies.
  • USDA announced a 20,000 MT soyoil sale to an unknown destination for 2012-13.
  • An 8-cent gain in Gulf basis for November delivery and a 4-cent increase for December and January shipment signal more demand news is likely ahead.
  • Also today, another strong export inspections tally of 61.992 million bu. reminded the market of consistently solid export demand.
  • Price moves this week could be amplified by light Thanksgiving trading volume.

Wheat futures are roughly 7 to 8 cents higher in Chicago, with Kansas City and Minneapolis wheat seeing slightly lighter gains.

  • Wheat futures are benefiting from spillover support from corn and beans as well as weakness in the U.S. dollar index.
  • Plus, traders expect this afternoon's Crop Condition Report to reflect continued deterioration to the winter wheat crop due to drought in the Southern and Central Plains.
  • In addition, traders are still watching tightening supplies in the Black Sea region and elsewhere which are eventually expected to translate to improved demand for U.S. supplies.
  • But buying interest is being limited by news Ukraine is expected to export a record 3.2 MMT of grain this month ahead of the Dec. 1 export halt.
  • Weekly wheat export inspections of 11.102 million bu. met expectations.

Live cattle futures are trading mid- to low-range with slight gains. Feeder cattle futures are also slightly higher.

  • Live cattle futures are benefiting from light followthrough buying to start the week after Friday's Cattle on Feed Report confirmed supplies will tighten in 2013 and improved investor risk appetite to start the week.
  • But that is the extent of buying interest as cash cattle interest will be limited ahead of a holiday-shortened week.
  • This morning, Choice boxed beef values rose $1.06 while Select cuts fell 16 cents. Movement was strong at 139 loads.
  • Outside markets are also supportive as a weaker U.S. dollar index may improve beef export demand and gains in crude oil futures and the stock market reflects improved risk appetite.

Lean hog futures continue to enjoy sharp gains in December futures, while deferred months are mostly moderately higher.

  • Risk appetite is high across the commodity sector today thanks to signs the housing sector recovery is continuing and optimism leaders are serious about addressing the fiscal cliff.
  • This plus lighter trading volume ahead of Thanksgiving is giving lean hogs a boost.
  • Traders are also optimistic demand will improve after Thanksgiving, as per the seasonal trend.
  • But for now, the cash market is steady to lower despite wide packer profit margins as packers are bought ahead on needs for an abbreviated kill schedule.
  • Traders are ignoring expectations Wednesday's Cold Storage Report will show frozen pork stocks at the end of October at 632.5 million lbs., which would be more than 100 million lbs. over the current record for end-of-October frozen pork stocks and 26% above the five-year average.
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