Market Snapshot, Noon CT (VIP) -- October 5, 2012

October 5, 2012 07:04 AM
 

 

Corn futures remain under pressure at midday with nearbys 7 to 8 cents lower

  • Traders are reducing risk ahead of the weekend and next week's Crop Production Report.
  • Ideas are mounting that USDA will likely up its production estimates in this report.
  • Informa Economics reportedly expects USDA to raise its 2012 production estimate to 11.194 billion bushels.
  • Meanwhile, concerns about demand destruction linger. Basis levels have been slow to improve after harvest passed the halfway point, which some say could signal better-than-expected yields.
  • But a softer dollar and gains in the stock market are limiting selling pressure.

 

Nearby soybean futures softened slightly ahead of midday to trade 5 to 9 cents higher, while deferred months are seeing slight losses.

  • Nearby soybean contracts are benefiting from ongoing indications that prices are not slowing use. USDA this morning announced that China had purchased another 180,000 MT of soybeans for 2012-13. This follows news the country bought 21,000 MT of soybean oil on Wednesday and a strong weekly export sales tally yesterday.
  • Gulf basis strengthened this morning and at midday; more demand news may lie ahead.
  • But buying interest will likely remain limited ahead of USDA's production estimates Thursday. If Informa Economics' reported data is any indication, it could be bearish.
  • Informa Economics reportedly pegs soybean production at 2.86 million bushels.

 

Chicago wheat is around 7 cents lower in nearby contracts while deferred months are mixed. Kansas City and Minneapolis wheat is seeing losses around 3 to 5 cents.

  • Weakness in the corn market is making it difficult for wheat to find buyers today.
  • But supportive outside markets thanks to a decline in the U.S. unemployment rate is limiting pressure, too.
  • Bears have the upper hand, however, as U.S. wheat has still been unable to attract export buys, despite tightening global stocks.
  • News Russia plans to double its sales from government intervention stocks to 1 MMT to cool domestic prices is adding pressure. The country is expected to start selling up to 100,000 MT per week beginning Oct. 23.
  • More precip in the forecast for the U.S. Plains is another source of light pressure, though snow and cold in more northern regions is hampering winter wheat emergence.

 

Live cattle futures are split with nearby contracts slightly to moderately higher and deferred months steady to slightly lower amid bull spreading. Feeder cattle futures have improved to post slight gains.

  • Cash cattle trade took place at firmer prices yesterday of mostly $124. This has provided nearby futures a boost today as economic concerns have faded amid friendly jobs data.
  • But gains are being limited by $1.11 decline in Choice boxed beef cuts and a $1.27 fall in Select values this morning. Movement also slowed to 89 cents.
  • If the boxed beef market continues to falter, feedlots will have a hard time getting packers to raise bids next week as animal weights are on the rise and packers continue to cut in the red.
  • Feeder cattle futures are enjoying light short-covering thanks to weakness in corn.

 

Lean hog futures have softened to choppy trade at midday.

  • Traders are taking a step back and reevaluating how much (if anything) is left in the hog market's rally since early September. Ideas the upside has been overdone is encouraging profit-taking ahead of the weekend.
  • Also, the cash hog market is mostly steady today after steady to firmer trade most of the week. Supplies have tightened and the pork market has delivered a generally impressive performance this week. Impressive morning movement of 24 loads signals today may hold more of the same.
  • Deferred months are also being pressured by ideas the recent rally in prices may encourage producers to reevaluate their plans to cut their breeding efforts.
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