Market snapshot, Noon CT (VIP) -- November 5, 2012

November 5, 2012 06:10 AM
 

Corn futures have extended losses to trade mostly 2 to 5 cents lower.

  • Strength in the dollar has resulted in a "risk-off" day of trade. Outside markets are jittery ahead of tomorrow's presidential election.
  • Weekly export inspections of 14.685 million bu. came in below expectations and the cumulative inspections pace slipped further behind what's needed to reach USDA's export projection.
  • Traders are hesitant to add long positions ahead of Friday's USDA reports. Traders look for USDA to raise the size of the corn crop slightly from last month and to lower its export projection.

 

November through July soybean futures are 9 to 17 cents lower, with farther deferred contracts favoring a slightly firmer tone amid bull spread unwinding.

  • Nearby soybean futures are being pressured by improved weather in South America. Heavy rains are in the forecast for some of the driest areas of central and eastern Brazil (northern soybean production areas) after some beneficial weekend showers were seen.
  • However, ongoing corn planting delays in Argentina due to too much moisture raise expectations some acres will be shifted to soybeans.
  • Lofty weekly soybean inspections of 59.442 million bu. were within expectations, but are being ignored as some pressure for nearby contracts is also being seen due to strength in the U.S. dollar index.
  • Traders will also be focused on evening positions ahead of Friday's key USDA Crop Production Report, which is expected to show an increase in crop size from last month.

 

Wheat futures have turned mixed at all three exchanges after earlier trading firmer.

  • Global and domestic crop concerns continue to support wheat, but spillover pressure is limiting buying interest.. Traders look for this afternoon's crop condition ratings from USDA to reflect stress on the HRW wheat crop.
  • Australia's largest exporter, CBH, lowered its estimate of the Western Australia crop to a range of 8.5 MMT to 9.3 MMT. They previously pegged the crop between 9.1 MMT to 9.3 MMT. Meanwhile, untimely late-season rains are threatening yields and crop quality in eastern Australia.
  • Strength in the dollar is also weighing on futures as traders recognize U.S. wheat is not competitively priced on the global market.
  • Weekly export inspections of 13.997 million bu. were within expectations, but the cumulative pace is below what's needed to reach USDA's export projection.

 

Live cattle futures have improved to mixed trade, with feeder cattle futures weaker.

  • December live cattle are enjoying light short-covering, as the contract is trading at a discount to last week's $126 to $127 cash cattle trade.
  • A mixed start to the boxed beef market doesn't provide a solid early clue to this week's cash trade. Choice beef values are up 14 cents this morning, but Select is down 85 cents. Movement is solid to start the week at 114 loads.
  • Strength in the U.S. dollar index and slight weakness in the Dow Jones Industrial Average are limiting buying in cattle futures. Traders remain concerned the East Coast recovery efforts will slow beef demand.

 

Lean hog futures are lower amid pressure from plentiful supplies.

  • Weakness in the cash hog market is weighing on lean hog futures. Cash bids are steady to $1 lower as packers are well bought ahead on slaughter needs for the week and market-ready supplies are plentiful.
  • Pressure on December lean hogs is being limited by the steep discount it holds to the cash index.
  • Traders will be keeping a close eye on the pork product market this week as packers' profit margins are holding in the black, but traders remain concerned meat demand will be hurt by the struggles on the East Coast.
     
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