Market Snapshot, 10:00 am CT (VIP) -- December 17, 2012

December 17, 2012 04:14 AM
 

Corn futures have weakened to trade mostly 4 to 8 cents lower through the December 2013 contract. Far-deferred futures remain mixed.

  • Corn futures softened with the start of open-outcry trading. Traders remain concerned with slow demand, both domestic and export.
  • Gulf corn basis is steady to 2 cents higher for January shipment to suggest some stability in the cash market. But the recent trend in basis is down, although basis remains well above the three-year average due to tight supplies.
  • Argentina continues to battle heavy rains and flooding through its central grain region. But traders are uncertain how much this will impact corn acreage and production.
  • Technically, corn futures are in the lower end of the trading range, which means fresh buying in futures and the cash market could surface at any time -- if the pattern holds.

 

January soybean futures are holding near unchanged. Deferred months are now 3 to 8 cents lower.

  • The start of pit trade brought a round of profit-taking to the soybean market. While demand remains strong, traders are looking to take advantage of the recent rally.
  • USDA announced a 151,000-MT soybean sale to unknown destinations, with 91,000 MT for 2012-13 and 60,000 MT for 2013-14. Strong demand limits downside risk.
  • Private consulting firm AgRural raised its Brazilian soybean production estimate to a record 82.2 MMT, from 81.9 MMT previously, as growing conditions have improved through the first half of December. Crop conditions are largely favorable through Brazil.
  • January beans continue to struggle to find active buying interest above the psychological $15.00 mark.

 

Wheat futures are now slightly lower at all three exchanges.

  • Wheat is following corn this morning. When corn turned lower and soybeans pared gains, buying interest in the wheat market faded.
  • Traders remain concerned with demand for U.S. wheat, which has been highlighted by a lack of consistency in the export market. Traders will be disappointed if the recent price slide doesn't attract fresh business.
  • Technically, bears have the strong upper hand after old-crop futures violated the bottom of the long-standing, choppy range last week. A drop below last week's lows would threaten to sharply extend price declines.

 

Live cattle futures opened mostly firmer and have extended gains, with the December contract leading the advance. Feeder cattle futures are slightly firmer.

  • Nearby live cattle futures gapped higher on the open and have extended gains as buy stops are being triggered. December live cattle are sharply higher despite starting the week at a premium to last week's cash trade.
  • If futures are able to hold gains into mid-week, it would increase the odds packers will pay steady to firmer cash cattle prices compared with last week's $124 to $125 trade.
  • Technically, winter-month live cattle futures are back near the top of the long-standing, choppy trading range, while some of the deferred contracts have posted upside breakouts.
  • Feeder cattle futures are pulling support from unexpected price strength in live cattle and a softening of corn futures.

 

Lean hog futures are under light pressure to start the week.

  • Mild technical-based selling is being seen in lean hog futures as some traders are taking profits while the February contract is showing a head-and-shoulders topping formation on the daily price chart.
  • Selling interest is being limited by a steady to firmer cash hog market, although February hogs are trading at around a $2.50 premium to the cash index.
  • Packer demand for cash hogs is solid to start the week as this will be the last full slaughter week until after the holidays. But there are concerns packer demand for cash hogs could wane with the average cutting margin below breakeven again.
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