Market Snapshot, 10:00 a.m. CT -- (VIP) -- December 30, 2013

December 30, 2013 03:58 AM
 

Corn futures remain 2 to 3 cents lower this morning.

  • Weekend rains in both Argentina and Brazil are weighing on the corn market to start the week. Precip did miss some key production areas of Argentina, however.
  • The forecast for Argentina calls for more hot temps as well as some timely rains.
  • Weakness in the U.S. dollar index is helping to limit selling pressure for the corn market.
  • Also, traders expect this morning's USDA Weekly Export Inspections Report to confirm solid corn export demand.
  • News that Mexico's decision to restart import duties on white corn and sorghum will NOT apply to U.S. products due to the North American Free Trade Agreement is also limiting selling.
  • Gulf basis is steady this morning, as was true the bulk of last week.

Soybean futures have pared early losses to trade 3 to 7 cents lower.

  • Soybeans continue to chop within the trading range that has bound action throughout the month. Funds are hesitant to extend either long or short positions ahead of year-end. Trading volume is thin as many have opted to take an extended break from the market this holiday season.
  • On one hand, expectations for a record-large South American crop are high, despite some dryness concerns in Argentina.
  • Plus, much of the country saw beneficial rains over the weekend and there are chances for more precip in the week ahead. However, temps are expected to remain high.
  • But on the other hand, strong demand for U.S. soybeans has limited the market's downside and kept it range-bound through December.
  • Reminding the market of demand strength, USDA announced a 35,000-MT soybean oil sale to an unknown destination for 2013-14.
  • Gulf soybean basis held steady this morning, signaling supply and demand are balanced.

Wheat futures are down 2 to 4 cents in the SRW wheat market, while HRW is down 4 to 6 cents and HRS wheat is posting fractional to 3-cent losses.

  • The wheat market continues to track the corn market, as lackluster demand means it does not have the ability to rally on its own.
  • Traders will receive an update on this front in this morning's inspections report.
  • Meanwhile, Russia's ag minister says the country's 2013 wheat crop of 54.4 MMT is up 37% from the previous year, which reminds of increased global competition with U.S. supplies.
  • The risk of winterkill this week is helping to limit pressure after mild temps late last week eroded snowcover in some areas.
  • Wheat has suffered major technical damage over the past month, which makes adding long positions unattractive, especially ahead of year-end when thin trading volume ups the risk of big price swings.

Live cattle futures are steady to slightly higher this morning. Feeder cattle futures have softened to trade slightly to moderately lower.

  • Record high cash cattle prices in Texas and Nebraska Friday are lifting nearby futures to start the week. But with futures already in line with cash trade ranging from $132 to $134 on the Southern Plains, buying enthusiasm is limited.
  • Bitter cold across the nation's northern tier could lead to still higher trade this week. Cash trade was active last week despite the high prices, signaling showlists were likely cleaned up.
  • Boxed beef action will also be closely watched as a gauge of demand. The product market improved Friday, with Choice cuts up 6 cents and Select 84 cents higher. Movement also improved to 140 loads, though this tally is still on the light side.
  • Feeder cattle futures are seeing some light profit-taking today after recent gains.

Lean hog futures are slightly to moderately higher this morning, with deferred months leading gains.

  • Lean hog futures are benefiting from Friday's Hogs & Pig (H&P) Report which showed the Dec. 1 U.S. hog inventory was down a bit more than expected from year-ago levels.
  • USDA also made a number of bullish revisions to the past two years of inventory data.
  • Buying enthusiasm in nearby contracts is being tempered by a $2.33 slide in the pork cutout value on Friday, which counters ideas the product market may be working on a seasonal low. Movement did pick up to 351.10 loads.
  • The cash hog index was most recently projected higher for the first time in an extended period. However, it remains nearly $7 below the front-month, which is limiting buying interest.
  • Early cash hog bids are mostly steady as some packers are in need of supplies. Frigid conditions in the upper Midwest makes producers unwilling to transport hogs.
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