Market Snapshot, Noon CT (VIP) -- October 3, 2012

October 3, 2012 07:03 AM
 

 

Corn futures are choppy ahead of midday, favoring a weaker bias.

  • As soybeans improved to choppy trade, corn benefited from short-covering.
  • But bears remain in control. In part, this can be attributed to news Monsanto announced it expects 2013 seedings of 96 million acres, which is in line with the 2012 growing season's lofty plantings.
  • Also, FC Stone raised its corn crop estimate to 10.824 billion bu. yesterday. This has raised thoughts this year's crop may not be "as bad" as thought, which could be reflected in USDA's Crop Production Report next week.
  • Gulf basis is a penny higher for all 2012 delivery months, signaling limited supplies are available for end users and/or strong demand.
  • Overall tight supplies and an easing of harvest pressure continues to limit corn's downside.

 

Soybean futures rallied ahead of midday to mixed trade.

  • "Bargain buying" returned to soymeal and then soybeans, helping the markets to move well off their earlier lows and even into positive territory for some contracts.
  • Support also comes from news China bought 21,000 metric tons (MT) of soyoil for 2012-13 today. This is notable as the country is celebrating a holiday this week and it is not typically a soyoil buyer.
  • But harvest is underway and hedge-related pressure is ongoing.
  • FC Stone increased its soybean production estimate to 2.849 billion bu. yesterday, which also raises concerns this year's crop may be "less bad" than thought.
  • News Monsanto expects farmers to increase bean plantings in 2013 to 76.1 million acres is also limiting buying interest.
  • Gulf soybean basis was steady this morning and at midday.

 

Wheat futures firmed ahead of midday to mixed trade.

  • As corn and soybeans backed off their early losses, pressure on wheat eased.
  • Egypt's state-owned wheat buyer purchased a total of 240,000 MT of French and Argentinean wheat for December shipment today. This reminds the market U.S. wheat is not competitively priced on the global market, but also that supplies in the Black Sea Region are dwindling.
  • Recent rains in the U.S. Central and Southern Plains have improved winter wheat crop planting and establishment prospects, limiting gains.

 

Live cattle futures have softened slightly to favor the upside in mixed trade. Feeder cattle are also choppy with an upside bias.

  • Buying and selling interest in cattle futures is limited as October futures are near in line with last week's cash prices and traders are uncertain about this week's trade.
  • Packers are cutting in the red and showlist estimates are up for the week. But the boxed beef market improved yesterday and this morning and feedlots are also thought to be losing around $100 a head on average.
  • This morning, Choice values rose 10 cents and Select cuts firmed 79 cents. Movement was a strong 154 loads.
  • Feeder cattle futures are benefiting from ongoing weakness in the corn market, though there is uncertainty how long this will last with harvest pressure easing.
  • Strength in the U.S. dollar index is limiting buying interest in the livestock sector today.

Lean hog futures are mixed, with nearby contracts slightly to sharply higher.

  • Dollar strength has encouraged traders to take advantage of recent gains by booking some profits today. But the uptrend remains in place.
  • The cash market is steady to firmer today as strong gains in the pork market yesterday improved packer profit margins.
  • Also encouraging this is a slight pullback in supplies from recent weeks. Hog weights declined last week in Iowa and southern Minnesota. Plus, this week's kill is expected at 2.34 million head, which is closer to year-ago levels than the recent aggressive pace.
  • The fact that October futures have only extended their premium to the cash hog index this week signals traders believe more upside potential is ahead for the cash market.
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