Market Snapshot, 10:00 am CT (VIP) -- December 19, 2012

December 19, 2012 04:12 AM
 

 

Corn futures have softened to trade mostly 1 to 6 cents lower with nearbys leading to the downside.

  • Interest toward either side of the market is limited ahead of the holidays, especially with fiscal cliff uncertainty still hovering over the market.
  • Profit-taking picked up in the corn market as soybeans softened.
  • Firmer Gulf basis levels for nearby delivery signal transportation disruptions on the Mississippi River, but this is countered by recognition that export demand remains lackluster.
  • Light pressure also stems from a major winter storm slated to hit the Corn Belt today. Soils are dry so precip is welcome.

 

Soybean futures have softened to post double-digit losses in most contracts as the market moved through near-term levels of support.

  • Early today, soybeans benefited from light short-covering on ideas the downside was overdone yesterday. But risk aversion as illustrated by losses in the stock market has led to increased selling in the soybean market.
  • Traders also remain spooked by yesterday's soybean order cancellations, though this may simply signal it was worth paying cancellation fees to redo purchases at current lower prices.
  • However, this may also signal China (responsible for at least 300,000 MT of the cancellations) may anticipate it will be able to book supplies at lower prices from South America.
  • Favorable precip for the Corn Belt and Brazil this week are adding pressure.

 

Wheat futures have pared gains to just 1 to 4 cents at all three locations.

  • Wheat futures reined in gains as corn and soybeans softened, but the market is displaying some resilience thanks to signs U.S. wheat is finally beginning to attract export demand as a result of tightening Black Sea region supplies.
  • This morning USDA announced Egypt purchased 110,000 MT of HRW wheat for 2012-12, which was followed by news Egypt's state-owned buyer (GASC) has purchased 180,000 MT of SRW wheat for February shipment.
  • Plus, news Russia's SovEcon estimates the country's wheat stocks as of Dec. 1 stand at are down 40% from the year-prior are a reminder of tightening supplies overseas.
  • But recent and forecast precip for the Central Plains are keeping gains in check.

 

Live and feeder cattle futures are enjoying slight to moderate gains this morning.

  • Yesterday's late selloff was technical in nature. Thus, futures are enjoying light short-covering today encouraged by weakness in the U.S. dollar index.
  • Also, the approaching storm could cause some packers to bid more aggressively for supplies, though the fact that they are preparing for a holiday-shortened week adds uncertainty as do negative cutting margins. Bid and asking prices are still around $5 apart.
  • Boxed beef action yesterday delivers mixed signals. While Choice cuts fell 93 cents, Select cuts firmed 51 cents and movement was impressive at 225 loads.
  • Traders are also beginning to ready positions for Friday's Cattle on Feed Report, which is expected to show On Feed at 93.4%, Placements at 91.2% and Marketing at 100.2% of year-ago levels. Tightening supply prospects are supportive.
  • Feeder cattle futures are also enjoying short-covering on ideas the downside was overdone yesterday.

 

Lean hog futures gapped higher on the open and are trading moderately higher in February futures while deferred months are slightly higher.

  • Lean hog futures are being supported by a $1.13 gain in the pork cutout value yesterday and impressive pork movement of 153.25 loads. This confirms ideas retailers plan to feature the more economical pork following the holidays.
  • Also, the cash hog market is expected to be mostly steady again today. While a few packers are working to secure loads for Friday and Saturday, profit margins near breakeven limit demand.
  • Also, a blizzard for the Midwest will make it difficult for producers to get hogs to market.
  • Also supportive is news average hog weights in Iowa/southern Minnesota fell 1.3 lbs. from last week, which signals supplies are current.
  • A weaker U.S. dollar index is also supportive.

 

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