Market Snapshot, 10:00 am CT (VIP) -- December 12, 2012

December 12, 2012 04:10 AM
 

Corn futures have seen choppy trade this morning, but at present, most contracts are fractionally to 2 cents lower.

  • Corn futures continue to chop sideways to lower amid a lack of fresh fundamental news.
  • Yesterday's USDA report data was friendly, but the lack of a major bullish surprise left bulls unwilling to add risk.
  • Adding to this hesitation is uncertainty about what decisions about the expiring Operation Twist program will result from the Federal Reserve policy-setting meeting today and what comments -- if any -- Chairman Ben Bernanke will make regarding the fiscal cliff.
  • Steady to a penny lower Gulf basis today signals the ongoing absence of fresh export demand news.
  • Adding light pressure, a South Korean feed company favored South America in its purchase of four cargoes of corn this morning, as has been the trend.

 

Soybean futures have pared losses to trade mostly 2 to 5 cents lower.

  • Futures' inability to rally yesterday despite a larger-than-expected cut to USDA's carryover projection signals strong demand is already considered factored into prices and that a new source of support is needed to encourage buying in beans.
  • Improved rain chances for Brazil and statements by Argentina's ag secretary that crops in the country are in good shape despite soggy conditions makes it especially tough for soybeans to find buyers.
  • News South Korea bought 110,000 MT of soybeans from Brazil overnight adds light pressure.
  • Adding to such concerns, Gulf basis slipped 5 cents for December and February delivery this morning.

 

Wheat futures have softened to post slight losses in Chicago and Kansas City while Minneapolis wheat is favoring the downside in mixed trade.

  • Early short-covering in the wheat market after yesterday's major downside breakout has given way to tentative followthrough selling.
  • Yesterday's selloff was sparked by an increase in 2012-13 carryover, whereas traders had expected USDA to cut its carryover projection. The increase was due to disappointing exports, despite tightening Black Sea region supplies.
  • And while severe dryness in the U.S. Plains is worrisome, it is too early for traders to get overly bullish about the crop.
  • Plus, USDA yesterday raised its production estimates for Australia, China and Canada, which helps to offset supply concerns in the U.S.

 

Live cattle futures have seen choppy trade this morning. Most contracts are currently favoring the upside. Feeder cattle futures are slightly to moderately higher.

  • Live cattle futures are benefiting from ideas this week's cash cattle trade prospects have improved after a surge in boxed beef prices yesterday. In addition, supplies are tighter this week. But December futures are already at a premium to last week's mostly $124 trade.
  • Deferred contracts are benefiting from yesterday's news USDA expects beef production in 2013 to be down nearly 5% compared to this year.
  • Outside markets are mildly supportive of commodity buys this morning as the stock market is firmer and the dollar index is lower on ideas the Fed will announce some sort of continuation of Operation Twist at the conclusion of its policy-setting meeting today.
  • Softer corn prices are encouraging followthrough buying in feeder cattle futures after strong gains yesterday.

 

Lean hog futures are mostly steady to lower this morning.

  • Traders are engaging in some light profit-taking to start today's session.
  • While packer profit margins are again solidly in the black, cash hog bids are still steady to lower as there are ample market-ready supplies available.
  • While the pork cutout market softened another penny yesterday, movement surged to 166 loads, signaling some retailers are still finishing up their holiday buys.
  • The cash hog index softened for the the first time in weeks, but at $85.40, it is still $3.60-plus above the December contract with just two days remaining until expiration.
     
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