Market Snapshot, Noon CT (VIP) -- November 6, 2012

November 6, 2012 06:05 AM
 

Corn futures remain 1 to 3 cents higher in a quietly traded session, with support coming from positive outside markets.

  • Positive outside markets are encouraging short-covering in the corn market, but given the lack of fresh news, buying is limited.
  • While crude oil futures have extended gains and the Dow Jones Industrial Average is posting triple-digit gains this election day, corn traders are largely on the sidelines as they await Friday's key USDA data.
  • A survey of 21 firms done by Dow Jones Newswires reflects expectations for a slight drop in the size of the corn crop from last month, although the average trade guess for corn yield of 122.1 bu. per acre is up from 122 bu. per acre in October.
  • Additionally, the survey reflects traders' expectations that USDA will raise 2012-13 corn carryover by around 16 million bu. to a still-tight 635 million bushels.
  • Rain-related planting delays in Argentina are also supportive as it increases yield risks.
  • Gulf corn basis is flat this morning to reflect a lack of fresh demand news.

 

Soybean futures are mostly 7 to 15 cents higher, with meal and soyoil seeing spillover support from positive outside markets.

  • The combination of ideas recent losses are overdone and strength in outside markets are contributing to short-covering in the soy complex. Soybean futures are trading near session highs as crude oil and gold have extended early gains.
  • For now, forecasts for better rain chances in northern production areas of Brazil this week are being put on the back burner. Drier conditions are also expected in some southern production areas of Brazil, but rains are forecast to return to Argentina by Thursday, making it unlikely active planting progress will be made there.
  • A Dow Jones Newswires survey reflects traders, on average, expect USDA to raise the size of the soybean crop by 30 million bu. from last month, with yield expected at 38.2 bu. per acre (37.8 bu. per acre in October).
  • The survey also reflects traders' expectations that USDA will increase 2012-13 soybean carryover by a mere 3 million bu. from last month to 133 million bushels.
  • Gulf soybean basis is flat, which reflects a "balanced" supply and demand situation.

 

Wheat futures remain mostly 4 to 8 cents higher at all three exchanges on spillover support.

  • Weakness in the U.S. dollar index is creating a "risk-on" attitude in the commodity markets. The Continuous Commodity Index is posting sharp gains at midday.
  • Wheat is also finding support after yesterday's USDA Crop Condition Report reflected continued deterioration in the winter wheat crop. State weather and crop reports reflect the need for rains in the HRW wheat belt to stabilize the crop. But the forecast for the next two weeks is dry. As a result, traders are anticipating more crop deterioration. Even so, it's hard to get traders too excited about crop conditions in the fall.
  • Traders look for USDA to raise 2012-13 wheat carryover by around 12 million bu. from last month to 666 million bu. in Friday morning's Supply & Demand Report.

 

December through April live cattle have firmed on help from the boxed beef market. Far-deferred futures are mixed. Feeder cattle futures are also mixed, with nearby contracts firmer.

  • Nearby live cattle futures have firmed on strength in the boxed beef market. Choice boxed beef values are up 94 cents and Select is up $1.94 on movement of 94 loads this morning.
  • Strength in the product market is encouraging traders to narrow the discount December live cattle hold tot last week's $126 to $127 cash cattle trade.
  • Cash cattle trade is still up in the air as showlist numbers are up from week-ago and packer margins are negative.
  • Traders will continue to gauge the beef market as they remain concerned about the potential of lost beef demand as the East Coast recovers from Sandy.
  • Feeder cattle futures are following live cattle, although buying in nearby contracts is being limited by slight strength in the corn pit.

 

December through April lean hogs have firmed, while the rest of the market is slightly to moderately lower.

  • Support for nearby lean hog futures is coming from positive outside markets, as well as traders narrowing the discount December hogs hold to the cash index.
  • Deferred contracts have extended early losses amid spreading as well as followthrough from yesterday's technical losses.
  • The cash hog market is steady to $1 lower as packers see no trouble securing needed supplies this week. Expectations are for the cash market to drift lower into Thanksgiving as poultry features take center stage.
     
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