Market Snapshot, Noon CT (VIP) -- October 1, 2012

October 1, 2012 06:55 AM
 

 

Corn futures have softened to trade 1 to 3 cents lower in all but far deferred contracts, which are mostly firmer.

  • Heavy losses in the soybean market are making it difficult for corn to find buyers today. Therefore, traders are booking profits after Friday's limit-higher gains.
  • But USDA's sub-1 billion bu. carryover peg will continue to limit downside risk.
  • Emphasizing the need for rationing is USDA's announcement that Mexico bought 100,000 metric tons (MT) of optional origin corn -- 33,333 MT of which are for 2012-13 and 66,667 MT for 2013-14.
  • Plus, traders expect USDA's Crop Progress Report this afternoon to show harvest moved past the halfway point to 55% complete. This signals hedge-pressure is likely easing.
  • Today's weekly corn export inspections tally of 20.17 million bu. met expectations but was down around 4.7 million bu. from last week.

 

Soybean futures have extended early losses to trade 30-plus cents lower through the May contract, while deferred months are seeing losses in the teens to 20s.

  • Early profit-taking following strong gains Friday triggered sell stops.
  • USDA's Quarterly Grain Stocks Report on Friday set old-crop carryover at higher-than-expected levels. This is gaining more attention today, now that bullish corn carryover estimates have been factored into prices.
  • Harvest pressure is also weighing on the market. Traders expect USDA to peg harvest at 38% complete this afternoon.
  • Brazil's ag consultancy Celeres raised its 2012-13 production estimate to 79.08 million metric tons (MMT) due to an increase in its planted acreage estimate. This would be a 19% increase in crop size over year-ago.
  • Traders are ignoring a surge in weekly soybean export inspections to 41.699 million bu., which topped expectations by a wide margin and represented a 29.149 million bu. increase over last week.

 

Wheat futures have softened further to trade 20-plus cents lower at all exchanges.

  • Wheat traders are booking profits after strong gains Friday amid spillover pressure from soybeans.
  • Recent rains in the Southern Plains have improved soil moisture enough to encourage active winter wheat planting, though more northern regions remain worrisomely dry.
  • The Institute for Agricultural Market Studies (IKAR) raised its Russian wheat crop estimate by 1 million metric tons (MMT) to 40 MMT and says the country exported 7.9 MMT of grain since July 1. It sees October grain exports slipping to 2.5 MMT from 3 MMT in September.
  • Traders are ignoring news weekly wheat export inspections of 24.485 million bu. topped expectations and last week's tally.

 

Live cattle futures have improved to post slight to moderate gains. Feeder cattle futures have also improved to trade mixed with a downside bias.

  • Cattle futures are enjoying some light short-covering amid ideas the downside was overdone last week as supplies are expected to contract through year-end.
  • Cash cattle trade last week took place $3 or more below the week prior, supporting ideas a near-term top is in place. Traders will watch this week's showlist estimates and boxed beef action before forming cash cattle assumptions this week.
  • This morning the boxed beef market saw some much-needed improvement, with Choice cuts holding steady and Select cuts rising 12 cents. Movement was strong at 124 loads.
  • Outside markets are also mildly supportive today, as better-than-expected U.S. manufacturing data for September is outweighing signs of economic weakness in China and Europe, for the time being.
  • Friday's limit-higher move in corn continues to weigh on feeder cattle futures.

 

Lean hog futures have firmed to trade moderately to sharply higher.

  • Lean hog futures continue to benefit from signs the cash hog and pork market are pointed higher over the near-term as profitable packer margins are keeping demand at a level that matches seasonal supply expansion.
  • Cash hog bids are mostly steady today as packers work to widen profit margins.
  • The pork cutout market continued its rally on Friday, though movement slowed slightly to 44.6 loads. This morning's movement was a strong 15 loads.
  • Deferred contracts are also benefiting from Friday's Quarterly Hogs & Pigs Report, which showed supplies contracting in 2013 as a result of drought and high feed costs. Farrowing intentions for September through November were pegged at 97% of year-ago levels.
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