Market Snapshot, 10:00 a.m. CT -- (VIP) -- December 17, 2013

December 17, 2013 04:01 AM

Corn futures are enjoying 1- to 4-cent gains this morning.

  • A 278,384 MT daily corn sale to Japan for 2014-15 delivery is lifting corn futures to start the day session as it reminds of rebuilding demand.
  • Gulf basis was steady to 1 cent higher for near-term delivery this morning, signaling more export demand news may lie ahead.
  • But concerns linger about recent Chinese rejections of U.S. corn due to the presence of unapproved GMO content in shipments.
  • Countering this, however, is news South Korean importers have agreed to accept early delivery of 195,000 MT of U.S. corn in anticipation of more Chinese corn rejections. The deal came with price reductions, however.
  • Favorable South American weather is also limiting buying in the corn market.

Soybean futures have improved to trade 1 to 3 cents higher in most contracts.

  • Soybean futures are enjoying followthrough buys after yesterday's strong finish. Spillover from the corn market is also supportive.
  • Strong export demand for U.S. soybeans, while not enough to spur active buying interest, has kept a floor under the market.
  • Yesterday's NOPA crush data also points to very high domestic demand for U.S. soy products.
  • But expectations for a record-large South American crop are high as conditions in the country are generally favorable. Key will be whether producers can get the beans shipped in a timely fashion.
  • There are also some concerns China may cancel U.S. soybean orders as the country has bought ahead on its needs as insurance against any shipping troubles in Brazil or Argentina.

Wheat futures are fractionally to 3 cents higher in all three flavors in nearby contracts, while far deferred months are under light pressure.

  • Gains in the corn market and ideas the downside has been overdone are encouraging light short-covering in the wheat market.
  • There are also some concerns about another arctic blast that is expected the latter half of the week across the Plains. Recent milder temps have diminished protective snowcover on the High Plains.
  • But demand concerns and recent technical damage means buying interest outside of short-covering will remain limited.
  • News Iran purchased wheat from the Baltic Sea and that Egypt purchased 120,000 MT of Romanian and Russian wheat is limiting gains. This reminds of ample world supplies and much competition on the export front for the U.S.
  • Gulf basis slid 4 to 5 cents for near-term delivery, also signaling tepid demand.

Live cattle futures faced light pressure on the open, but the market has now improved to mixed trade. Feeder cattle futures remain slightly to moderately lower.

  • Live cattle futures are seeing some light profit-taking this morning after seeing gains yesterday.
  • Early expectations are for steady to higher cash cattle prices compared to last week's $131 price action. But December futures are already at around a $1 premium to last week's cash trade.
  • Supporting these ideas are tighter showlists and a strong start to the boxed beef market.
  • Showlist estimates are down around 27,000 head from week ago, with Texas leading the decline.
  • Choice boxed beef cuts firmed $1.08 yesterday and Select rose $1.40, though movement was relatively light at 125 loads.
  • Strength in the corn market is weighing on feeder cattle futures. Dollar strength adds profit-taking incentive.

Lean hog futures got off to a choppy start, but most contracts are now favoring the upside.

  • A jump in the pork market to start the week have quelled demand concerns. The pork cutout value surged $3.81 yesterday and movement was respectable considering price strength at 326.27 loads.
  • Packers are planning a large weekend kill to make up for downtime next week for the Christmas holiday. This along with highly profitable packer profit margins are keeping early cash hog bids mostly steady. But some lower bids are expected in the western Corn Belt where hogs are readily available.
  • The front-month is at nearly a $6 premium to the cash hog index, which is keeping it under pressure.
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