Market Snapshot, 10:00 am CT (VIP) -- December 14, 2012

December 14, 2012 04:06 AM
 

 

Corn futures improved slightly as soybeans rallied to trade mostly 2 to 5 cents higher.

  • Corn futures are benefiting from spillover from soybeans and a weaker U.S. dollar index to wrap up the week.
  • Also, news China rejected two corn shipments from Argentina raise hopes the U.S. will still be able to attract some corn export business.
  • Adding to this idea is a Sinograin official's report that China's 2012 corn crop wasn't as large as forecast, rising just 5.1 MMT from last year, in contrast to China's statistics bureau's report production rose 15.34 MMT from year-ago.
  • But this is countered by expectations South Korea will favor South America in its purchases of more than 630,000 MT of optional origin corn feed in two days.
  • Also, Gulf basis continued its recent decline today. Basis for December and January shipment fell 10 and 6 cents, respectively, this morning.

 

Soybean futures have extended gains with the open of pit trading to trade roughly 6 to 18 cents higher, with nearby contracts leading gains.

  • NOPA soybean crush data for November reminded the market of solid soy demand. Soybean crush of 157.308 million bu. met expectations and represents an 11.3% increase over year-ago. Soyoil stocks of 2.385 billion lbs. topped expectations.
  • Plus, weekly export sales tallies the past two weeks have topped 1 MMT.
  • All of this signals prices are not curbing demand, which is finally encouraging the market to work to find a price that does so to wrap up the week.
  • But expectations for a large South American crop continue to harness bullish enthusiasm, especially considering a favorable near-term forecast for Brazil and Argentina.
  • Data indicating China's manufacturing sector is improving is also supportive as this should translate to an ongoing voracious appetite for beans in the country.

 

Wheat futures have also rallied to trade mostly 2 to 8 cents higher in Chicago while other locations are seeing slight gains.

  • Wheat futures are enjoying spillover support from soybeans as well as short-covering on ideas the downside has been overdone, especially considering drought on the U.S. Central and Southern Plains with little chance of relief in the forecast.
  • But that is the extent of buying interest as the wheat market did major chart damage this week after USDA unexpectedly raised its 2012-13 wheat carryover estimate 50 million bu. Tuesday.
  • News the International Grains Council expects global wheat production to rise 5.4% to 690 MMT in 2013-14 is also limiting buying interest.

 

Live cattle futures got off to a lower start, but they have since improved to mixed trade. Feeder cattle futures are slightly to moderately lower.

  • About 1,000 head of cattle were sold late yesterday in Texas at $124.50, which is up marginally from last week's $124 trade in the region.
  • Other feedlots have held out for higher prices, however, though yesterday's $1.27 decline in Choice boxed beef values may encourage them to move cattle at prices closer to those the week prior.
  • Tighter showlist estimates and strong boxed beef movement this week are supportive of at least steady cash cattle prices.
  • December futures are at nearly a $2 premium to last week's cash trade, limiting upside potential but also signaling bullish expectations for this week's cash trade.
  • Traders in the feeder cattle market are booking some light profits after strong gains earlier this week and amid firmer corn prices today.

 

Lean hog futures are slightly higher in the December contract, while deferred months are posting slight to moderate losses.

  • Hog futures rallied late in yesterday's session. Traders are taking advantage of this by booking some profits ahead of the weekend.
  • Support yesterday stemmed from improvement in the cash hog market as positive cutting margins and plans for a large kill next week boosted packers' near-term needs.
  • Cash hog bids are expected to be mostly steady with a few firmer bids again today, which should limit selling interest.
  • Ongoing signs that China's economy is improving support ideas export demand for pork will remain strong.
  • December lean hogs expire at noon CT today. Thus, traders will be working to narrow the $1-plus discount it holds to the cash hog index over the next few hours.

 

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