Market Snapshot, Noon CT (VIP) -- October 13, 2012

October 16, 2012 06:54 AM
 

 

Corn futures have softened to trade marginally to 4 cents lower.

  • Supportive outside markets are encouraging light short-covering in nearby contracts, but that is the extent of buying interest as the market was reminded of demand destruction.
  • Japan purchased 250,000 MT of corn from Ukraine for 2012-13 today.
  • Plus traders still have the fact that livestock and poultry producers in the southeastern region of the U.S. recently bought 1.35 MMT of corn from South America on their minds.
  • Also, the China National Grain and Oils Information Center (CNGOIC) forecasts its 2012 corn crop at a record 201 MMT. This marks the second consecutive year of record production and signals China will have less of a need to import U.S. corn in 2012-13.

 

Soybean futures have pared gains to trade 7 to 8 cents higher in nearby contracts, while deferred months are posting gains mostly of 1 to 5 cents.

  • Early gains in the soybean market gave way to profit-taking. But bulls maintain the upper hand thanks to a weaker U.S. dollar index and the need for more supply rationing.
  • Today, USDA announced a daily soybean sale of 110,150 MT to unknown destinations for 2012-13. This is the latest of a string of signs that current prices are seen as a value.
  • CNGOIC lowered its 2012 soybean production estimate from 13 MMT to 12.8 MMT, upping the likelihood China will remain a major importer of U.S. beans.

 

Wheat futures have softened to trade pennies lower in Chicago and Kansas City while Minneapolis wheat is holding onto slight gains in most contracts.

  • As corn softened to mixed trade, profit-taking in wheat increased.
  • Yesterday's crop progress report showed winter wheat planting is in line with the five-year average, but emergence lags the normal pace by six percentage points.
  • But recent and forecast rains for the U.S. Plains improve winter wheat crop prospects.
  • Ukraine's ag ministry says its grain stocks are down sharply from last year to 19.4 MMT as of Oct. 1, but Ukraine's grain exports from July 1 to Oct. 15 totaled 6.64 MMT -- an increase of 73% from last year.
  • While tightening global stocks signals the U.S. should soon receive a boost in export demand, traders are growing impatient waiting for this to occur.

 

The October live cattle contract is sharply higher, while deferred months are slightly to moderately higher. Feeder cattle futures are also enjoying moderate gains.

  • The boxed beef market is off to another strong start this morning, as Choice cuts are up $1.01 and Select cuts are up $1.62. Movement was also solid at 104 loads.
  • This along with tighter showlist estimates points to firmer cash cattle trade compared to week-ago. Asking prices in Texas have been established at $127, which is up $1 to $2 from trade there last week.
  • Outside markets are also supportive of commodity buying today, as the stock market is up sharply and the U.S. dollar index is under pressure.
  • Feeder cattle extended early gains as corn softened. Spillover from live cattle is adding light support.

 

Lean hog futures continue to see mixed trade with most contracts favoring the upside.

  • Traders remain watchful for a top in the pork product market. Pork demand typically slows following Thanksgiving buying and supplies will continue to expand into year-end.
  • But recent gains in the pork cutout value signal this has not yet occurred.
  • As a result, packers are keeping bids mostly steady today as profitable cutting margins give them incentive to keep kill lines full.
  • The December contract is also benefiting from the steep discount it holds to the cash index.
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