The Federal Reserve today announced it will launch a stimulus program in which it will buy $40 billion worth of mortgage-backed securities per month in addition to its other asset purchases to boost the struggling U.S. economy. It will continue to do so until the jobs outlook improves.
Corn futures have firmed slightly to trade 2 to 4 cents higher.
- USDA's bearish report data yesterday weighed on corn futures, but this has since returned some bargain buyers to the market as the crop is still seen as tight.
- Steady to firmer Gulf basis levels this morning signal limited supply availability and/or demand strength.
- This morning's weekly export sales data showed corn sales of 214,800 metric tons (MT) for 2012-13 and 212,500 MT for 2013-14, which were within expectations and a marked improvement from recent weeks. This is adding light support.
- Also, Strategie Grains cut its estimate for 2012-13 corn production in the European Union by 4.3 million MT (MMT) to 53.7 MMT.
- But this is countered by news the China National Grain and Oils Information Center forecasts Chinese corn imports at around 1 MMT in 2013, which would be down sharply from 5.5 MMT forecast for this year.
Soybean futures have improved to mixed trade, with nearbys favoring the downside.
- Strong gains yesterday on confirmation of tight bean supplies have encouraged profit-taking today.
- But that is the extent of selling interest as today's announcement of a third round of quantitative easing is commodity-buying friendly and more price rationing is needed.
- Solid weekly export soybean sales of 628,200 MT for 2012-13 are a reminder of this.
- While the national average bean basis softened a touch last week, it remains in line with the three-year average. Gulf basis levels are steady to firmer again today.
Wheat futures have strengthened to trade mostly 7 to 9 cents higher at all locations.
- Wheat is enjoying some buying interest thanks to yesterday's slightly tighter than expected U.S. supply outlook.
- Plus, the global supply outlook continues to tighten. Today, Strategie Grains cut its 2012-13 soft wheat production estimate for the European Union by 1.7 MMT to 123.6 MMT.
- Expansion of drought across the Plains could also diminish U.S. winter wheat prospects.
- And while news that Egypt purchased 235,000 MT of Russian, Ukrainian and French wheat and that Syria purchased 50,000 MT of Black Sea origin wheat reminds the market U.S. wheat is not competitively priced, they also remind the market that Black Sea wheat supplies are tightening.
- This morning's weekly wheat export sales of 381,800 MT for 2012-13, which fell short of expectations.
Live cattle futures are moderately higher in the front-month while deferred contracts are under light pressure. Feeder cattle futures are moderately higher.
- Cash cattle trade took place at firmer prices of $126 to $127 on the Plains, but this was already factored into prices. Thus all but but the front-month is seeing light profit-taking.
- The firmer cash prices were encouraged by boxed beef strength and tighter showlist estimates. Traders will continue to closely monitor boxed beef action as prices are approaching levels that have trimmed demand in the past.
- This morning, Choice values slid 16 cents and Select cuts firmed 28 cents. Movement was strong at 135 loads.
- Weekly beef export sales were also strong at 16,800 MT.
- Feeder cattle futures have softened to mixed trade due to firmer corn prices.
Lean hog futures remain under light pressure.
- A $1.70 plunge in the pork cutout value yesterday has renewed concerns the market is still searching for a low
- But downside risk is being kept in check by ideas that burdensome supplies are factored into prices will soon help the market to put in a low.
- This week's hog slaughter is projected at 2.44 million head, which would be a record for September and near the all-time high of 2.47 million head in December 2007.
- Packers are enjoying strong profit margins, but they are having no trouble securing supplies. Thus, cash hog bids are steady to lower today.