Market Snapshot, Noon CT (VIP) -- November 9, 2012

November 9, 2012 06:12 AM
 

Corn futures have pared gains to favor the downside in mixed trade.

  • Traders continue to see highly choppy trade today as traders digest USDA's carryover and production forecasts. While both these estimates were up from last month by a greater than expected amount, they still represent tight supplies.
  • And demand news gives this even more significance. Today the market learned that Japan bought at least 500,000 MT of U.S. corn for January through March shipment due to shipping delays in Brazil.
  • Similar news may lie on the horizon as Gulf basis levels have recently trended steady to higher. This was the case this morning and at midday.
  • But heavy losses in the soybean market and dollar strength amid economic concerns in the U.S. and abroad are limiting buying interest to short-covering.
  • Pressure also stems from news Informa Economics reportedly expects 2013 corn seedings be up 0.8% from year-ago at 97.7 million acres.

Soybean futures have extended early losses to trade 20- to 30-plus cents lower with nearby contracts leading to the downside.

  • Early pressure was attributed to bearish USDA report data, as USDA raised its carryover and production estimates even more than expected.
  • Plus, USDA maintained its high soybean production estimates for Brazil and Argentina.
  • Early selling pressure due to the reports triggered sell stops as the market moved through key support at the October lows.
  • For now, the market views strong demand as factored into prices and is not concerned about rationing what is still a relatively small crop.
  • Dollar strength adds to the negative tone.

Wheat futures are back near session lows with Chicago and Kansas City posting double-digit losses and Minneapolis mostly 4 to 6 cents lower.

  • As corn softened, so did wheat as traders shifted to profit-taking ahead of the weekend.
  • USDA raised 2012-13 wheat carryover by a more-than-expected 50 million bu. from last month to 704 million bushels. It also raised 2012-13 global wheat carryover by 4.18 MMT from last month to 174.19 MMT, though this is still down 12% from year-ago.
  • But losses are being limited by dryness in the U.S. Southern Plains; the HRW condition rating is already well below year-ago levels.
  • Ukraine grain exporters received verbal word from the country's ag ministry that 5.5 MMT of wheat can be exported from July 1 to Dec. 1, after which a ban on wheat exports will likely be officially imposed, according to the Ukraine Grain Association.
  • Informa Economics reportedly raised its wheat plantings outlook to 57.1 million acres from 56.8 million acres last month.

Live and feeder cattle futures remain choppy at midday.

  • A few light cash cattle sales have taken place in Nebraska at $125 and $126 in Texas, which is down a buck from last week, but trade has yet to get underway in earnest. Thus, futures continue to chop sideways.
  • Expectations are for lower trade in light of deeply negative packer profit margins and weakness in the boxed beef market to wrap up the week.
  • This morning, Choice boxed beef cuts fell $1.54 and Select cuts fell $1.38. Movement was decent at 96 loads.
  • But with December futures already at a discount to last week's cash prices, downside risk is limited.
  • USDA's lowered its 2012 and 2013 beef production projections this morning and raised its price forecasts for both years.
  • Feeder cattle futures are benefiting from a pullback in the corn market.

Lean hog futures remain mixed amid pre-weekend position squaring.

  • Lean hog traders are favoring the upside as they even positions ahead of the weekend.
  • December futures continue to benefit from the discount it holds to the cash hog index.
  • Support also comes from a 99-cent increase in the pork cutout value yesterday along with strong movement. This boosted packer profit margins.
  • This morning's Supply & Demand data is also mildly supportive. USDA lowered its 2012 and 2013 pork production projections and made only minor adjustments to its price projections for cash hogs. It also raised its 2012 and 2013 pork export forecasts.
  • But supplies continue to build and pork demand typically slumps ahead of Thanksgiving. This is limiting buying interest.
  • The cash hog market is again steady to lower today.
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