Market Snapshot, Noon CT (VIP) -- October 15, 2012

October 15, 2012 07:01 AM
 

Corn futures continue to see losses around 13 cents through the July contract, while deferred months are seeing slightly lighter losses.

  • Corn continues to face spillover pressure from soybeans along with followthrough selling after the market was unable to maintain gains after USDA confirmed tight supplies last Thursday.
  • But selling is being limited by this morning's weekly corn export inspections of 17.235 million bu., which were near last week's tally and the top of pre-report expectations.
  • But the market remains concerned about reports that high prices have caused Southeastern livestock and poultry producers to import cheaper South American supplies.

 

Soybean futures have trimmed losses slightly, but most contracts remain 20-plus cents lower, with nearbys facing the heaviest losses.

  • Traders continue to book profits in soybeans, encouraged by dollar strength and the market's inability to stay above technically supportive prices.
  • Plus, reports of better-than-expected yields as harvest progresses at a record-setting pace adds pressure.
  • But despite an increase in supplies coming to market, basis levels are improving as buyers are scooping up as many supplies as possible now as they fear higher prices lie ahead.
  • Recent and forecast rains for Brazil are adding pressure, as this improves chances of a record-large crop. Argentina, however, remains unfavorably soggy.
  • Weekly soybean export inspections surged to 57.824 million bu., which topped lofty expectations. This signals current prices are encouraging rather than rationing use.
  • Chinese demand for soybeans remains strong. For the first nine months of this year, China has imported 44.3 MMT of soybeans, a 17.7% increase from year-ago.

 

Wheat futures are mostly 8 to 9 cents lower in Chicago, 6 to 9 cents lower in Kansas City and steady to 4 cents lower in Minneapolis.

  • Wheat futures continue to face spillover pressure from corn and soybeans.
  • Plus, a highly disappointing export inspections tally of 7.003 million bu. reminded traders that tightening global stocks have yet to translate to improved demand for U.S. wheat.
  • In addition, the Plains and Midwest benefited from heavy rains over the weekend. This should give winter wheat planting a boost and improve establishment of the crop.
  • But wheat's downside remains limited by the fact that the Black Sea region will soon drop out of the global export market due to dwindling supplies. Production concerns also exist in areas of Australia.

 

October through February live cattle are slightly to moderately higher and deferred months slightly lower. Feeder cattle futures are still enjoying moderate gains.

  • Nearby contracts are benefiting from last week's firmer cash cattle trade and hopes that this week's strong start in the boxed beef market will justify more of the same.
  • This morning, Choice cuts surged $2.22 and Select rose $1.79. Movement was decent if not impressive at 82 loads.
  • Traders expect Friday's Cattle on Feed Report to point to tightening supplies in 2013, which is also supportive.
  • But packers are still cutting in the red and they have already sourced their near-term needs, which will enable them to hold out in hopes cash prospects will weaken.
  • Feeder cattle futures are benefiting from weakness in the corn market.

 

Lean hog futures are posting slight to moderate losses in all but the December contract, which is slightly higher.

  • Cash hog bids are steady to firmer this morning, signaling cash hog supplies are less readily available than thought. This is limiting selling pressure on nearby futures.
  • The December contract is benefiting from the discount it holds to the cash hog index.
  • But weakness in deferred contracts signals the market expects lean hogs to soften in the months ahead as building supplies outpace demand. Last week's slaughter was up 3.3% compared to year-ago.
  • Dollar strength is also limiting livestock buying interest.
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