Ahead of the Open (VIP) -- December 13, 2013

December 13, 2013 02:17 AM
 

Corn futures are called 2 to 3 cents lower on concerns about Chinese demand.

  • Corn futures ended the overnight session near the lows, posting losses between 2 and 3 1/2 cents.
  • China-based consulting firm Shanghai JC Intelligence Co. says 4,000 MT to 5,000 MT of DDGs from the U.S. are being held for testing of the presence of MIR 162 (Syngenta's Agrisure Viptera).
  • The lingering Viptera situation in China raises concerns about near-term demand to the country, although China was noted as a buyer in yesterday's weekly sales report.
  • March corn is trading at around a 5-cent premium to the expiring December contract, which gives it a downward target to achieve.
  • Meanwhile, Gulf corn basis is steady this morning to stand 68 cents over March futures.

 

Soybean futures are called 5 to 10 cents lower with nearbys leading losses.

  • Nearby soybean futures ended the overnight session 10 to 11 cents lower, with deferred futures down 5 to 9 cents.
  • Funds are actively lightening their long exposure to the market. Key this morning will be if January beans respect uptrending support drawn off November reaction lows, as the contract is hovering above this important level.
  • Favorable weather for South America is being noted as a reason behind price weakness, as well as rumors of Chinese order cancellations.
  • However, China's Ministry of Commerce has nearly doubled its December soybean import forecast to 6.34 MMT, which is now up from November's peg of 6.03 MMT.
  • Gulf soybean basis is steady this morning to stand $1.00 over January futures.

 

SRW and HRW wheat are called 2 to 4 cents lower, with HRS down 1 cent.

  • SRW and HRW wheat ended the overnight session mostly 2 to 4 cents lower, with lighter losses of around a penny seen in the HRS market.
  • A combination of spillover from neighboring pits and the bearish technical situation is expected to weigh on wheat futures this morning.
  • While domestic supplies are tighter than year-ago, building global supplies have largely been the reason behind recent price weakness.
  • CBS Group raised its Western Australia grain crop from last month, saying yields were better than expected. Wheat accounts for about two-thirds of the crop. Earlier this week, USDA raised its forecast for the Australian wheat crop.
  • But signaling demand has improved is a pop in Gulf SRW wheat basis this morning. For immediate delivery, Gulf basis is up 8 cents, with basis up 11 to 12 cents for early 2014 delivery.

 

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

  • Live cattle futures are expected to be mixed as the market is still waiting on cash trade to begin. Feeder futures should favor a firmer tone on weakness in the corn market.
  • Bids and asking prices remain several dollars apart, which signals cash negotiations could extend well into the afternoon.
  • Extending cash negotiations could hurt feedlots due to this week's larger showlist and yesterday's sharp drop in boxed beef values. Cash expectations are now softening, with most expecting steady to lower trade compared with last week's $132 prices.
  • Meanwhile, December live cattle are trading in line with last week's cash trade, which provides feedlots with some hope of steady trade.
  • Stressful feedlot conditions and tightening supplies overall make traders comfortable some premium built into futures.

 

Lean hog futures are called steady to weaker on weakness in the pork market.

  • Lean hog futures are called lower based on building supplies and deterioration in the pork cutout market.
  • Pork values slipped $1.87 Thursday amid sharp declines in bellies, hams, ribs and picnics. Movement was solid, but not overly impressive, at 352.3 loads.
  • While packers are still enjoying profitable margins, the cash market is called steady to weaker as packers are having no difficulty securing supplies.
  • But there is some hope hog weights have peaked after Iowa/southern Minnesota weights declined 1.3 lbs. last week. However, weights remain above year-ago.
  • December lean hog futures are trading in line with the cash index ahead of today's noon, CT expiration. But February hogs are trading at around a $7 premium to the index and will soon have the responsibility of following cash more closely.
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