Market Snapshot, 10:00 am CT (VIP) -- December 20, 2012

December 20, 2012 04:10 AM
 

Corn futures have moved off their earlier lows to trade roughly 5 to 8 cents lower.

  • Bears in the corn market are being fueled by followthrough technical selling as the market broke through key levels of support yesterday. Spillover from soybeans is adding to the negative tone.
  • Also, this morning's weekly export sales report came in well below already low expectations with 114,400 MT sold for 2012-13 and 5,800 MT sold for 2013-14.
  • Also reminding the market of lackluster export demand, Gulf basis levels slipped 1 to 2 cents for January through March delivery.

 

Soybean futures have pared losses to the teens after trading as much as 30-plus cents lower earlier this morning.

  • January soybean futures appear headed for a a test of the psychological $14.00 mark, followed by the November low as traders are dumping long positions after key levels of support were violated earlier this week.
  • The looming fiscal cliff is adding incentive for traders to reduce risk ahead of year-end.
  • News China canceled 540,000 MT of soybean purchases for 2012-13 following cancellations of 420,000 MT by China and unknown destinations earlier this week is also weighing heavily on the bean market.
  • Also, Gulf basis levels slid 2 and 7 cents for December and January delivery, respectively, this morning.
  • And while weekly export sales of 619,400 MT for 2012-13 and 10,500 MT for 2013-14 represent still-solid demand, the total did fall short of expectations.

 

Wheat futures have pared gains slightly to trade roughly 14 to 16 cents lower in Chicago and around 9 to 11 cents lower in Kansas City and Minneapolis.

  • Spillover from corn and especially soybeans continues to weigh on wheat futures.
  • The fact that wheat futures broke through near-term levels of support today is adding incentive for funds to lighten their long exposure to the market.
  • Also, some areas of the Southern Plains saw drought conditions ease over the past week, though much more precip is needed.
  • The Climate Prediction Center's Seasonal Drought Outlook calls for drought to persist or intensify across much of winter wheat country, however, which limiting pressure.
  • Also, weekly export sales of 651,100 MT for 2012-13 and 20,000 MT for 2013-14, topped expectations and represents marked improvement over recent weeks.

 

Live cattle futures are posting slight losses this morning, while feeder cattle futures are under light pressure.

  • Traders are engaging in profit-taking after yesterday's impressive gains.
  • While expectations are for at least steady cash cattle trade compared with last week, nearby futures are already at a $3-plus premium to the top end of last week's prices, limiting upside potential.
  • Boxed beef prices have been mixed all week, but this has encouraged strong movement.
  • Packers are preparing for a holiday-shortened schedule next week, but they could have some difficulty securing supplies due to the winter storm event in the Central Plains and Midwest disrupting transportation.
  • Weekly beef export sales of 13,100 MT for 2012 and 6,400 MT for 2013 remind the market of solid export demand, limiting selling interest to profit-taking.
  • Pressure on feeder cattle futures is being limited by ongoing weakness in the corn market.

 

Lean hog futures are also posting slight to moderate losses this morning.

  • After the hog market posted impressive gains yesterday, traders are taking a step back and booking some profits today.
  • Adding to the negative tone is a 64-cent decline in the pork cutout value and a pullback in movement to 68.3 loads yesterday.
  • This helped drop packer profit margins back into the red, which is keeping cash hog bids mostly steady today despite transportation difficulties due to the Midwest blizzard.
  • Also limiting buying interest is the steep premium (nearly $5) the front-month contract holds to the cash hog index.
     
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