Ahead of the Open (VIP) -- December 11, 2013

December 11, 2013 02:17 AM
 

Corn futures are called 1 to 3 cents higher as funds cover short positions.

  • Corn futures didn't stray too far from unchanged in a choppy overnight session. Bulls hold a slight advantage heading into the open after a steady to firmer end to overnight trade for nearby contracts.
  • Funds, who are still net short the corn market, have turned their focus on evening positions as they move to the sidelines and close their books for the year.
  • Traders still have yesterday's USDA Supply & Demand Report on their minds. While the agency trimmed 2013-14 carryover more than expected, supplies are plentiful to meet a rebuilding base of demand.
  • News China rejected a 59,100 MT cargo of U.S. corn due to the presence of MIR 162 (Syngenta's Agrisure Viptera) is limiting buying interest, as traders expect more rejections of the nearly 2 MMT of U.S. corn currently on its way to China.
  • USDA announced this morning that an unknown buyer purchased 120,000 MT of corn for 2013-14.
  • Gulf corn basis is 2 cents firmer for immediate delivery this morning to reflect improved demand.

 

Soybean futures are called 1 to 2 cents higher in lackluster trade.

  • Soybean futures ended the overnight session mostly 1 to 2 cents higher on a continuation of short-covering seen in late trade yesterday.
  • Traders' initial reaction to USDA's Supply & Demand Report is positive as the department trimmed carryover further. But traders' focus quickly turned to building global supplies and futures ended lower, although off the lows.
  • There are some concerns about rust appearing earlier than normal in Mato Grosso due to the rainy start to the season, although agronomists say producers are working to get it under control. Generally favorable weather is forecast for most areas of South America this week.
  • Technically, bulls still hold the near-term advantage in the soybean pit as futures continue within the boundaries of the uptrending channel. The January contract spent the overnight session pivoting around $13.40.
  • Gulf soybean basis is steady this morning.

 

Wheat is called marginally to 1 cent lower amid lackluster demand.

  • SRW wheat futures ended the overnight session mixed, while HRW and HRS wheat were 1 to 3 cents lower.
  • A pickup in demand for U.S. wheat would help to stabilize the market, but increased competition due to a large Canadian crop raises concerns U.S. wheat will continue to struggle on the global market.
  • However, Gulf SRW wheat basis is 2 cents firmer for nearby delivery to suggest a pickup in demand.
  • According to official Russian customs data, wheat exports the first 10 months of the year of 10.52 MMT were down 26.5% from year-ago.
  • Meanwhile, FranceAgriMer has raised its wheat export forecast for the country to 18.95 MMT (18.26 MMT previously) due to better demand from outside the EU.
  • While frigid temps continue to blanket the Plains, traders' concerns of winterkill remain limited as much of the crop is insulated by snow or ice.

 

Live cattle futures are called mixed as traders wait on cash trade to begin.

  • Live cattle futures were choppy yesterday and that trend is expected to continue today as traders even positions and wait on cash trade to begin.
  • Frigid temps across the Plains and Midwest are stressing animals and have feedlots asking higher prices for this week's supplies.
  • But with packer margins in the red and market-ready supplies up from last week, expectations are for steady to lower cash trade compared to last week's $132 trade.
  • Choice beef values softened by 40 cents and Select declined 11 cents yesterday. But packers moved an improved 198 loads of boxes.

 

Lean hog futures are called mixed amid position squaring.

  • Following yesterday's slight to moderate losses, lean hog futures are expected to be mixed on a combination of followthrough pressure and short-covering.
  • Price action in the December contract will be limited ahead of its expiration.
  • But February lean hog futures soon have the responsibility of following the cash market more closely. This raises the risk of sharp near-term pressure as the contract holds around a $7 premium to the cash index.
  • Poor road conditions across the Midwest aren't expected to slow hog movement enough to support the cash market and supplies are plentiful. As a result, the cash market is called mixed at best, with most locations offering steady to weaker bids.
  • Pork cutout values firmed 3 cents and movement was light at 304.57 loads yesterday.
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