Market Snapshot, 10:00 am CT (VIP) -- December 13, 2012

December 13, 2012 04:05 AM
 

Corn futures have softened to trade mostly 1 to 3 cents lower.

  • Traders were again reminded of lackluster corn export demand today by USDA's weekly export sales report. While sales of 258,900 MT for 2012-13 and 13,700 MT for 2013-14 met expectations, the tally itself was relatively meager.
  • Plus, the corn export pace continues to fall farther behind that needed to reach USDA's export projection.
  • Gulf basis levels that are 4 to 6 cents lower for winter delivery this morning, which is also telling of lackluster corn export demand.
  • News Stretegie Grains expects the European Union's 2013-14 corn crop to rise 16% from last year to 63 MMT is adding light pressure.

 

Soybean futures have extended early gains to trade mostly 7 to 13 cents higher, with nearby contracts leading gains.

  • This morning's weekly export sales report gave bulls something to get excited about; sales of 1,319,400 MT for 2012-13 (a new marketing-year high) topped expectations by a wide margin and renewed criticism of USDA's decision not to raise its export projection.
  • Exports commitments for 2012-13 are currently 32% ahead of last year, while USDA on Tuesday said it still projects exports will lag year ago by 1.2%.
  • Ongoing Gulf soybean basis strength for near-term delivery signals more export news will be on the horizon.
  • This supportive demand news is overshadowing improved weather in southern Brazil. Plus, overly wet conditions in Argentina delay the date exportable supplies will hit the market.

 

Wheat futures softened to favor the downside in choppy trade at all three locations.

  • Wheat futures initially benefited from some light short-covering amid ideas the downside has been overdone this week. But bears gained some traction after pit trading started.
  • The technicals favor market bears as this week's major downside breakout makes the path of least resistance to the downside.
  • News Strategie Grains expects EU wheat production to rise 9% in 2013-14 to 134.2 MMT is adding light pressure.
  • But selling interest is being limited by a much-improved weekly export sales of 518,600 MT for 2012-13 and 54,900 MT for 2013-14. This was well above last week's tally and just above expectations.
  • Also, this morning's drought monitor reflects ongoing drought across winter wheat country, though some improvement was seen along the Texas coast. But it is too early in the season for bulls to get overly excited about the U.S. wheat crop.

 

Live cattle futures are off to a solid start, with December futures moderately higher and deferred months enjoying slight gains. Feeder cattle futures are moderately higher.

  • Futures are enjoying short-covering on signs that retailers are still buying beef despite high prices. Yesterday, Choice boxed beef values fell 39 cents while Select rose 67 cents, but movement was strong at 200 loads.
  • This plus tighter showlist estimates could give feedlots an edge in cash cattle negotiations. The fact that traders continue to build the premium futures hold to last week's cash trade signals they expect higher cash cattle prices ahead.
  • But packers will be reluctant to raise bids from last week's $124 prices as they continue to deal with negative margins. Cash trade isn't expected until Friday.
  • Weekly beef export sales of 12,700 MT for 2012 and 2,100 MT for 2013 are down from last week but still represent solid demand.

 

Lean hog futures are enjoying slight gains this morning.

  • Lean hog futures are seeing light followthrough buying today after a strong close yesterday.
  • The market continues to benefit from confirmation from USDA of pork demand strength that is expected to continue. Pork exports were a record-high for October in terms of both volume and value.
  • But gains are being limited by mostly steady cash hog bids this morning. Some anticipate higher bids later today as some packers are in need of late-week supplies and they are preparing for a large kill next week.
  • Packer profit margins are in the black, giving them incentive to keep slaughter runs full.
  • While the pork cutout value slid 83 cents yesterday, movement was solid at 97.13 loads.
  • December futures are also benefiting from the discount they still hold the cash hog index with the contract's expiration looming at noon CT tomorrow.
     
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