Market Snapshot, 10:00 a.m. CT -- (VIP) -- December 13, 2013

December 13, 2013 03:57 AM

Corn futures are 2 to 4 cents lower in early trading.

  • Bearish attitudes continue to prevail in corn futures as traders digest China's continuing rejection of corn shipments.
  • 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).
  • Traders worry the lingering Viptera situation in China means more problems ahead for future shipments to that country, but China was noted as a buyer in yesterday's weekly sales report.
  • A firmer U.S. dollar index is also adding to today's negative tone.
  • News a bipartisan group of Senators have introduced legislation to remove the ethanol mandate continues to weigh on futures, although the proposal has many hurdles to jump before becoming law.
  • March corn is trading at a premium to the expiring December contract, which is adding addition downward pressure to that contract. March futures are currently testing support at yesterday's lows.
  • Gulf corn basis is listed as steady in early morning trading.

Soybean futures are 5 to 7 cents lower in old-crop contracts and 2 to 5 cents lower in 2014-crop contracts.

  • Soybean futures are lower as funds continue to lift out of their hefty long positions ahead of year end.
  • Strength in the U.S. dollar index is also adding to today's negative trend.
  • Technical traders view today's action critical as January futures are testing uptrending support drawn off November reaction lows which coincides with support at last week's lows.
  • Traders continue to look at favorable weather for South America as adding to already large crop prospects for that region. In addition, traders expect an increase in soybean plantings in the U.S. for the 2014 crop.
  • Rumors of potential cancellations of soybean purchases by China continue to circulate.
  • 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 reported as steady this morning.

SRW and HRW wheat are mainly 3 to 6 cents lower, with HRS down 2 to 4 cents.

  • Wheat futures are again under pressure from hefty global stocks, spillover weakness from corn and soybeans and the stronger U.S. dollar index.
  • Traders continue to look at building global supplies as reason to sell wheat futures as U.S. wheat prices are seen as uncompetitive on the global market. Any boost in global supplies makes it that much more difficult to trim U.S. stocks.
  • CBH 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.
  • However, this morning's gains in the Gulf SRW wheat basis signals improving demand. Basis is up 8 cents for immediate delivery, with basis up 11 to 12 cents for January and February delivery and 7 cents higher for March delivery.

Live cattle futures are slightly weaker while feeder cattle futures are slightly higher.

  • Live cattle futures are slightly weaker as traders continue to wait on cash trade to begin.
  • The gap between packer bids and feedlot asking prices remains several dollars apart, which suggests cash negotiations could extend well into the afternoon.
  • Showlists are up and yesterday's $2-plus drop in boxed beef values are seen as weakening feedlot negotiating positions. 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 and February futures are only fractionally about that price level. This has some traders looking for steady trade.
  • Weather conditions continue to stress cattle and tightening supplies overall make traders comfortable some premium built into futures.
  • While prices are down only slightly, March futures did leave a small gap at the open leaving yesterday's upswing as a small island on the chart.
  • Feeder cattle futures are favoring the plus side on the downswing in grain futures.

Lean hog futures are slightly weaker due to weakness in the pork market.

  • Lean hog futures are favoring the negative side of unchanged due to the sharp drop in pork cutout values and rising supplies.
  • Pork values fell $1.87 Thursday. Movement was not overly impressive at 352.3 loads.
  • Packers still enjoy profitable cutting margins but do not have to bid up to fill needs as supplies are plentiful. The cash market is called steady to 75 cents weaker as a result.
  • 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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