Market Snapshot, 10:00 am CT (VIP) -- December 10, 2012

December 10, 2012 04:08 AM
 

Corn futures are mostly 6 to 9 cents lower

  • Traders are reducing risk ahead of tomorrow morning's Supply & Demand Report, in which USDA is expected to raise 2012-13 carryover by 19 million bu. from last month to 666 million bushels. This is still well below ending stocks of 988 million bu. for 2011-12, however.
  • A wide range of pre-report trade guesses signals uncertainty about the figure, adding incentive to reduce risk exposure ahead of the report.
  • Plus, nearby corn contracts settled below their 50-day moving average Friday, which had been functioning as strong support in recent weeks. This has encouraged followthrough technical selling.
  • Light pressure also stems from news importers are buying Brazilian corn despite the risk of port congestion and thus delays.
  • Gulf corn basis is 2 to 6 cents lower for winter delivery, which signals there's no fresh export news on the horizon.

 

Soybean futures softened slightly with the open of pit trading, but they have since moved off these lows to again trade roughly 6 to 12 cents lower.

  • Traders are booking profits and reducing risk exposure ahead of USDA's Supply & Demand Report Tuesday morning.
  • The report is expected to favor market bulls as pre-report expectations are for USDA to peg 2012-13 carryover at 135 million bu., down 5 million bu. from November and down 34 million bu. from last year.
  • Favorable rain in the forecast for key growing areas of Brazil adds pressure.
  • But firmer soybean Gulf basis for December delivery and news China's November bean imports were up 3.2% from October and year-to-date imports are up 11.4% from last year limit downside risk to profit-taking.

 

Wheat futures have softened to post double-digit losses in Chicago and are roughly 5 to 7 cents lower in Kansas City and Minneapolis.

  • Risk aversion across the grain and soy markets ahead of tomorrow morning's USDA Supply and Demand Report is weighing on wheat futures today.
  • Pressure also stems from much-needed rain chances for the Southern Plains late this week.
  • News USDA announced a 115,000 MT wheat sale to Egypt for 2012-13, split between soft red winter and soft white wheat, is considered already factored into prices as this business was announced last week by Egypt's GASC.
  • News Argentina will reduce 2012-13 wheat exports to 4.5 MMT from 6 MMT in 2011-12 due to declining crop estimates is being overshadowed for now.

 

Live cattle futures are under light pressure this morning, while feeder cattle futures are enjoying slight gains.

  • Cash cattle trade got underway Friday at $124, which was down $1 to $2 from the week prior. This opens up downside risk for nearby contracts that are trading at a premium to these prices.
  • Adding to the negative tone was a $1.18 decline in Choice boxed beef values and a $1.31 fall in Select cuts Friday; movement also slowed to 150 loads.
  • In addition, news Russia is likely to essentially halt beef and pork imports from the U.S. amid ractopamine concerns adds light pressure.
  • Macro-economic uncertainty in the U.S. and euro-zone are adding to concerns about red meat demand.
  • Feeder cattle futures are benefiting from short-covering amid pressure on corn futures.

 

Lean hog futures are choppy with an upside bias this morning.

  • Lean hog futures are benefiting from light, corrective short-covering today on ideas last week's price plunge was overdone.
  • The pork cutout value slid 14 cents Friday, though movement was solid at 79.63 loads.
  • This adds to concerns demand is slowing now that retailer holiday buying is largely complete. This has caused the cash hog market to soften, especially as packer profit margins are back near breakeven and supplies are plentiful.
  • Plus, the Russia-U.S. permanent normal trade relations dispute continues to raise anxiety Russia will halt exports of U.S. pork and beef products.
  • The December lean hog contract is benefiting from the $3-plus discount it holds to the cash hog index as the contract expires at week-end.
     
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