Market Snapshot, Noon CT (VIP) -- November 7, 2012

November 7, 2012 05:58 AM

Corn futures are mostly 1 to 3 cents higher on concerns about flooding trimming corn acreage in Argentina.

  • The president of Argentina's corn association, Maizar, says excess rains in the country will trim 1 MMT to 2 MMT from crop prospects. The window for planting full-season corn without increased risk to yield is closing.
  • Upside potential in the corn pit continues to be limited by strength in the U.S. dollar index, but buyers have returned due to increased talk about acreage concerns in Argentina.
  • Traders are also evening positions ahead of Friday morning's Crop Production and Supply & Demand Reports. Traders look for USDA to lower the size of the corn crop slightly, with carryover also seen rising slightly as USDA is expected to trim its export projection.
  • Gulf corn basis has firmed for immediate shipment, raising the possibility of fresh export business.


Soybean futures are favoring a weaker tone, with the November through July contracts 4 to 6 cents lower.

  • Strength in the U.S. dollar index has triggered widespread selling in the commodity world and that's spilling over to soybeans.
  • Additional pressure is coming from improved rainfall chances in northern production areas of Brazil this week. Rains will encourage planting and help with emergence.
  • The back-and-forth price action seen so far this week is also due to traders evening positions ahead of Friday's USDA reports. Traders look for USDA to raise the size of the soybean crop slightly from last month and for 2012-13 carryover to climb by 3 million bu. to a still-tight 133 million bushels.


Wheat futures are posting double-digit gains amid crop concerns and technical buying.

  • A combination of technical-based buying and global crop concerns is providing support for wheat futures at all three exchanges. December Chicago wheat is testing the psychological $9.00 level.
  • The Australian Bureau of Meteorology says neutral ENSO conditions are expected to linger, which raises concerns about dryness impacting the HRW wheat crop in the U.S. Plains. The near-term forecast calls for continued dry conditions, which has traders anticipating an additional decline in crop condition ratings.
  • Highly negative price action in the U.S. dollar index limited buying interest early, but traders are more focused on the fundamental picture at the moment.
  • Traders look for USDA to raise U.S. wheat carryover by around 12 million bu. from last month to 666 million bu. in Friday morning's Supply & Demand Report.


Live and feeder cattle futures are slightly to moderately lower.

  • Live cattle futures are seeing a highly choppy day of trade. Nearby contracts have filled this morning's downside price gaps.
  • Still, a negative tone is being seen in cattle futures on spillover from sharp losses in the U.S. stock market and strength in the U.S. dollar index.
  • Boxed beef prices are mixed at midday. Choice values are 30 cents firmer while Select is down 56 cents. Movement is fairly strong at 124 loads.
  • Cash cattle trade is still up in the air, although most are expecting steady-at-best trade given this week's larger showlist as well as packers dealing with negative margins.
  • Traders are also concerned about meat demand amid the recovery efforts on the East Coast.
  • Feeder cattle futures are under pressure amid the selling pressure in the live cattle market and strength in the corn market.


Lean hog futures have rallied, with many contracts now sharply higher.

  • December lean hog futures are pivoting around resistance at the October high of $79.77 1/2 as buy stops were triggered to sharply extend gains. Fundamental support is coming from traders narrowing the discount the contract holds to the cash index.
  • Buying in lean hog futures is especially impressive given the negative posture of outside markets. The U.S. stock market is sharply lower and the dollar is stronger, which is resulting in widespread selling in the commodity sector today.
  • The cash hog market is steady to 50 cents lower as packers are having no difficulty securing needed supplies and they have seen margins tighten considerably this week.
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