Market Snapshot, Noon CT (VIP) -- October 12, 2012

October 12, 2012 06:50 AM
 

Corn futures have softened to post losses ranging from 13 to 19 cents, with nearbys leading to the downside.

  • Early profit-taking pressure on corn after strong gains yesterday triggered sell stops, with nearby contracts back to chopping around the $7.50 mark.
  • This morning's highly disappointing weekly corn export sales tally of 14,200 MT -- 10,000 MT of which are for 2013-14 -- reminded the market of demand destruction.
  • News a South Korean feedmiller canceled a tender for 210,000 MT of corn today due to high prices also reminds traders of reduced export demand.
  • Unconfirmed rumors the U.S. bought corn from Argentina is adding pressure.
  • Gulf basis is steady to lower for 2012 delivery and steady to firmer for next year. This points both to increased farmer selling and tight supply prospects over the long-term.

 

Soybean futures have extended early losses to trade 24 to 31 cents lower in most contracts.

  • Early profit-taking pressure on futures -- encouraged by the market's unimpressive close yesterday -- has triggered sell stops.
  • USDA's larger-than-expected soybean production estimate of 2.86 billion bu. is gaining more attention today.
  • Adding to the negative tone are weekly soybean sales of 500,700 MT for 2012-13 and 23,000 MT for 2013-14, which came in below expectations. However, commutative exports for this marketing year are still soaring ahead of the pace USDA projects.
  • Strong export demand in the face of high prices and the need for rationing continues to limit the market's downside risk.

 

Wheat futures are posting losses in the teens to 20s, with nearby Chicago and Kansas City wheat futures leading to the downside and Minneapolis seeing the lightest losses.

  • Pressure on corn and soybeans has made it difficult for wheat to find any buyers today. Rather, traders are taking advantage of recent strong gains by booking profits.
  • Also encouraging this is a weekly export sales tally of 279,900 MT. This came in below expectations and reminds traders U.S. wheat is still not competitive globally.
  • But production concerns overseas -- especially in the Black Sea region and Australia -- signal this will likely change in the near future. Global supplies are tightening.
  • Yesterday, USDA cut 4.71 MMT from its global carryover estimate from last month to 172 MMT, which is down 13.2% from year-ago levels.

 

Live cattle futures continue to post slight losses in most contracts, while feeder cattle futures are mostly moderately higher.

  • So far, just light cash cattle sales has taken place at prices $1 above last week, but this was disappointing to some who were expecting even bigger gains. This is encouraging some light profit-taking as traders wait for cash trade to pick up.
  • Packers have raised bids to $125 in Texas, but owners continue to pass on these higher prices. Feedlots feel boxed beef strength and tighter showlists justify even higher prices.
  • This morning, Choice boxed beef cuts rose 14 cents and Select cuts firmed 15 cents; movement was decent at 96 loads.
  • Feeder cattle are benefiting from corrective short-covering and weakness in corn futures.

 

Lean hog futures have softened to mixed trade, with nearbys slightly higher and deferred months slightly lower.

  • The October contract is trading near in line with the cash hog index, as it expires today.
  • Ongoing strength in the pork cutout market has helped demand to keep pace with expanding supplies, supporting nearby futures.
  • But traders are beginning to question how long the market will be able to buck the seasonal trend for a pullback in futures and cash prices, leading to some bull spreading.
  • Plus, yesterday's USDA production estimates and carryover projections have sparked worries about ongoing high feed costs.
  • Cash hog bids are mostly steady today as packers are having no trouble securing needs.
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