Market Snapshot, Noon CT (VIP) -- October 10, 2012

October 10, 2012 07:01 AM
 

 

Corn futures have softened to post losses around 4 to 6 cents through the July contract. Deferred months are mixed.

  • Traders are removing risk ahead of tomorrow's USDA reports. Expectations are for USDA to lower the corn crop peg and tighten carryover.
  • Also favoring market bears is news Australia's wheat exports in 2011-12 at the end of August were record-large and that Mexico is working to secure alternative markets for buying corn -- reminders high prices have destroyed demand.
  • Some spread trading activity with wheat is also pressuring the market as traders are adding short positions in corn and long positions in wheat.

 

Soybean futures have extended early losses to trade 20-plus cents lower through the January contract, while deferred months are seeing losses around 5 to 12 cents.

  • Traders are reducing risk exposure ahead of USDA's reports tomorrow. Broad risk aversion -- as seen by losses in the stock market -- are also encouraging of this.
  • Pre-report expectations are for USDA to raise its production estimate and carryover projection from last month.
  • Rain in the forecast for Brazil improves planting prospects, adding light pressure.
  • The market is ignoring news China bought 120,000 MT of soybeans for 2012-13. This signals high prices have yet to ration use.

 

Wheat futures have backed off their early gains to trade roughly 3 to 6 cents higher at all three locations.

  • Traders are spreading wheat against corn ahead of USDA's reports tomorrow, betting on higher wheat prices and lower corn prices. Traders expect USDA to lower its 2012-13 wheat carryover projection slightly from last month.
  • Recent production concerns overseas also has traders expecting USDA to lower its world production estimate due to dryness in areas such as Australia and the Black Sea region.
  • Russia's president today said there are no talks about the country imposing grain export restrictions at its meeting on this year's grain harvest. But he did say the government should ensure that only surplus grain will be used for exports. Dwindling supplies from the country signal the country will not be a major exporter the second half of 2012-13.
  • FranceAgriMer expects the country's 2012-13 wheat stocks to be the tightest on record (since 1999-2000) at 1.8 MMT.

 

Live cattle futures are posting slight losses in all but the front-month. Feeder cattle futures remain narrowly mixed.

  • Early expectations are for firmer cash cattle trade, but traders are engaging in some light profit-taking in deferred contracts as they wait for trade to begin.
  • This morning, Choice and Select values softened 4 and 36 cents, respectively, but the softer prices encourage impressive movement of 223 loads.
  • Adding leverage to feedlots are tighter showlist estimates and Monday's 24 deliveries against the October contract. This signals packers are short-bought for the week.
  • Lingering concerns about global economic health is limiting gains.
  • Traders in feeder cattle futures are waiting to see how corn reacts to USDA report data tomorrow before adding long or short positions.

 

Lean hog futures have firmed to trade moderately to sharply higher in most contracts.

  • Lean hog futures are benefiting from steady to firmer cash hog bids today. Profitable cutting margins have encouraged packers to keep slaughter on par with building supplies.
  • Strong gains and movement in the pork market yesterday helped strengthen these margins. Pork movement of 29.5 loads this morning signals today's performance may also impress.
  • The cash hog index continues to rise. Most recently it was pegged up 73 cents to $81.78. This is supportive of the soon-to-be front-month December contract, which is $3-plus below the index.
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