Market Snapshot, 10:00 a.m. CT -- (VIP) -- December 2, 2013

December 2, 2013 04:01 AM

Corn futures have softened to trade 4 to 5 cents lower in most contracts.

  • Spillover from soybeans and strength in the U.S. dollar index are pressuring the corn market to start the week.
  • Adding to the weaker tone is news China rejected another cargo of U.S. corn due to detection of an unapproved GMO product Friday. But the cargoes have reportedly been resold to another Asian destination.
  • The technical posture of the corn market continues to favor market bears. Corn futures are testing the 2013 lows today.

Soybean futures have reversed course to trade 6 to 14 cents lower through the August contract, with deferred months mixed.

  • Fund traders are starting December by actively booking profits. Last week's demand-spurred surge in prices along with strength in the U.S. dollar index are encouraging of this.
  • Also, the market benefited from soybean sales announcements every trading day last week. Such news was lacking today.
  • This morning's export inspections report is expected to reflect strong demand, however.
  • Brazil's AgRural raised its domestic soybean production estimate by 700,000 MT to 89.4 MMT, citing recent beneficial rains and control of the helicoverpa armigera caterpillar invasion.

Wheat futures have softened to trade 4 to 7 cents lower in the winter wheat markets while HRS wheat is 2 to 4 cents lower.

  • Spillover from the corn and soybean markets are pressuring the wheat market to start the month.
  • Strength in the U.S. dollar index is also encouraging light profit-taking after the market posted mild gains last week.
  • Traders remain concerned about the competitiveness of U.S. wheat on the global export market. Dollar strength works against this.
  • Also reminding of export competition, the European Commission raised its 2013 common wheat harvest estimate from 133.5 MMT in October to 134.2 MMT. This would be the largest crop for the bloc since 2008.

Live cattle futures are narrowly mixed in early trade. Feeder cattle futures are also choppy with a slight upside bias.

  • Traders are engaging in some light positioning as they await cash market signals this week.
  • Gains in the U.S. dollar index are encouraging some light profit-taking after last week's surge.
  • Cash cattle trade took place mostly at $1 higher prices last week at $132 on the Southern Plains, but futures are already at more than a $1 premium to these prices. Northern locations saw $132 to $134 cash action, which was up $2 to $4 from the week prior.
  • In addition, trade was very light in Texas last week, which could lead to heavier showlists this week.
  • While Choice and Select values rose Friday, movement slowed to just 86 loads.
  • Weaker corn prices are helping feeder cattle futures favor the upside.

Lean hog futures are narrowly mixed this morning.

  • Lean hog futures continue to chop in a narrow range that has bound action since mid-November.
  • The pork cutout value gained $1.49 Friday, but movement slowed to 266.46 loads. This helps keep packer profit margins strong, but it also raises concerns about demand.
  • Early cash hog bids are mostly steady as packers are in need of supplies coming out of the Thanksgiving holiday.
  • Dollar strength and the $4.50 premium the December contract holds to the cash hog index is limiting buying interest.
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