Market Snapshot, 10:00 am CT (VIP) -- December 11, 2012

December 11, 2012 04:08 AM
 

Corn futures have turned mixed, with nearby contracts fractionally higher and deferred months slightly lower.

  • USDA report data favored market bulls as USDA left its U.S. 2012-13 carryover estimate unchanged from last month, whereas traders had expected USDA to raise it by 19 million bushels.
  • USDA also trimmed its global carryover projection from last month to 117.61 MMT, which is well below last year's 131.04 MMT.
  • Light support also comes from the fact that USDA reduced its Argentine corn crop estimate by 500,000 MT due to flooding problems.
  • But buying interest for corn remains limited by recognition that demand has been lackluster. Steady to 6-cent lower Gulf basis levels signals fresh demand news is not coming soon.

 

Soybean futures have ventured into positive territory a few times this morning, but at present, most contracts are posting losses of 1 to 6 cents.

  • Traders are engaging in a sell-the-fact reaction to USDA's cuts to carryover. USDA's carryover cut was even greater than expected, but the fact that this was due entirely to an increase in projected crush and not to an increase in exports was disappointing to some.
  • USDA also trimmed its global carryover projection slightly to 59.93 MMT, but this is still above last year's tally of 56 MMT.
  • Pressure is being limited by news China bought 115,000 MT of soybeans for the 2012-13 season this morning. Also, a 3-cent increase in Gulf basis for December delivery signals more demand news may lie ahead.
  • Outside markets are also limiting pressure as the dollar is posting losses and the stock market is firmer.

 

Wheat futures have softened to trade 20-plus cents lower in Chicago. Kansas City wheat is posting losses in the upper teens and Minneapolis is seeing lighter, double-digit losses.

  • USDA delivered a bearish report for the wheat pit today, as it raised its 2012-13 carryover estimate for the U.S. more than expected to 754 million bu., due to a decrease in exports.
  • USDA also raised its global carryover projection from November to 176.95 MMT due to increases in wheat production estimates for Australia, China and Canada.
  • Plus, there are beneficial rains in the forecast for the U.S. Southern Plains. While much more precip will be needed to improve conditions on the Plains, the rain chances are making it difficult to spark buying interest.

 

Live cattle futures got off to a choppy start and have since firmed to trade slightly higher. Feeder cattle futures are enjoying moderate gains.

  • Live cattle futures are benefiting from ideas tighter showlist estimates and gains in boxed beef prices could help feedlots obtain prices above last week's $124 trade.
  • On the other hand, higher boxed beef prices trimmed movement to 150 loads and packer profit margins remain buried in the red, which will make them reluctant to raise bids.
  • USDA today raised its beef production forecast slightly for both 2012 and 2013 but said strong demand will justify higher cash cattle prices going forward.
  • USDA raised its average annual steer price for 2012 by 38 cents from November to $122.85 and its 2013 projection by $1 on either end of the range to $124 to $134.
  • Softer corn prices are encouraging followthrough buying in feeder cattle futures.

 

Lean hog futures are split with nearbys steady to slightly lower and deferred months slightly higher.

  • Futures are being pressure by steady to lower cash hog bids today as packer profit margins have slipped to near break even.
  • Plus, the pork cutout value slid 59 cents yesterday amid light movement; this reminds traders that retailer buying for the Christmas season is largely complete.
  • But pressure on nearby contracts is being limited by the discount they hold to the cash hog index, with just days remaining before expiration.
  • Light support also comes from news USDA trimmed its 2012 and 2013 pork production projection and, consequently, raised its average hog price forecasts for both years.
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