Market Snapshot, 10:00 am CT (VIP) -- December 18, 2012

December 18, 2012 04:04 AM
 

 

Corn futures have pared losses slightly to trade mostly 1 to 5 cents lower.

  • Traders are reducing risk ahead of what will be an extended holiday for Christmas and New Years for some.
  • Adding incentive to do so is recent rain in the Corn Belt with more precip (mostly snow) in the forecast.
  • Meanwhile, export demand remains lackluster and recent steady Gulf basis levels do not signal improvement is on the horizon.
  • A weaker U.S. dollar index and gains in the stock market and crude oil futures amid optimism at signs of compromise regarding the fiscal cliff are limiting pressure on corn.

 

Soybean futures continue to post losses in the 20s through the March contract, while deferred months are seeing losses mostly in the teens.

  • News China canceled 300,000 MT of soybean sales for 2012-13 and that unknown destinations had likewise canceled 120,000 MT of bean sales for the same marketing year are encouraging followthrough selling in the soybean market.
  • News unknown destinations bought 110,000 MT of soybeans for 2012-13 is not enough to offset this bearish news.
  • Gulf basis firmed 2 cents for immediate delivery this morning, signaling more export sales announcements may lie ahead.
  • A wetter forecast for both Brazil and the U.S. Corn Belt are also adding to the negative tone. This forecast has encouraged some private crop watchers to raise their South American production estimates this week.

 

Chicago and Kansas City wheat continue to post slight losses, while Minneapolis wheat is split with nearbys slightly higher and deferred months slightly lower.

  • Spillover from corn and soybeans are keeping the wheat market under pressure.
  • Plus, the forecast for insulating snow across the winter wheat belt is adding light pressure.
  • Also, March Chicago wheat futures slipped below the 200-day moving average today, which is encouraging some fund selling.
  • But ideas wheat could still stand to benefit from tightening wheat supplies in the Black Sea region, especially at current lower prices, is limiting selling in the wheat pit.

 

Live cattle futures opened under light pressure, but have since improved to mixed trade. Feeder cattle futures are enjoying slight to moderate gains.

  • Traders began today's session by booking light profits after strong gains yesterday.
  • Also encouraging this is recognition that yesterday's mixed boxed beef prices do not represent the product market strength needed to support higher cash cattle trade.
  • Plus, packers are still dealing with negative cutting margins. One large packer slashed its slaughter schedule Monday due to poor margins and slower demand preceding the holidays.
  • But concerns about the possibility of shipping disruptions due to an approaching winter storm event has encouraged light short-covering.
  • Softer corn prices are encouraging light followthrough buying in feeder cattle futures.

 

February lean hogs are under light pressure while deferred months are slightly higher.

  • Early cash hog bids are steady to slightly lower this morning as demand is lackluster ahead of the holidays. But as some packers are working to book more loads in anticipation of the first winter storm of the season, bids are expected to be mostly steady today.
  • Yesterday's 31-cent gain in the pork cutout market pulled some packer profit margins back into the red, but movement was unimpressive at 36 loads.
  • But the front-month contract is under light pressure due to the premium it holds to the cash hog index.

 

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