Market Snapshot, 10:00 am CT (VIP) -- December 21, 2012

December 21, 2012 04:09 AM
 

Corn futures remain steady to 5 cents around mid-morning.

  • Corn futures are benefiting from light, corrective short-covering as traders even positions ahead of what will be an extended break from the markets for many.
  • But the correction is largely technical in nature as little has changed fundamentally.
  • South Korea purchased 193,000 MT of optional origin corn, which it is expected to source from South America, though the U.S. is now included as a potential source. The original tender excluded U.S. corn as an option.
  • But even short-covering interest is limited as outside markets are a source of pressure after another breakdown of fiscal cliff talks.

 

Soybean futures have improved to post gains in the upper teens to low 20s in most contracts.

  • Soybeans are benefiting from short-covering amid ideas this week's steep selloff was overdone.
  • But that is the extent of buying interest for now as the South American growing season is off to a generally favorable start and this week's soybean purchase cancellations by China and unknown destinations remain close at hand.
  • Also, Tuesday's 110,000 MT bean sale was incorrectly reported as an export sale, when in fact it was a domestic sale.
  • This morning, soybean Gulf basis levels plummeted 11 cents for immediate delivery and 3 cents for January delivery, and was steady to higher for other months. This is telling of recent improvement in Mississippi River levels that are expected to keep it open to barge traffic into early 2013.

 

Wheat futures have reined in gains to trade mostly 1 to 3 cents higher at all three locations.

  • Wheat futures are also enjoying light short-covering, encouraged by spillover from soybeans and ideas the downside has been overdone this week.
  • A marked improvement in weekly export sales this week and news Taiwan bought 75,600 MT of U.S. wheat overnight, which adds to other sales announcements this week, signal U.S. wheat is again competitively priced.
  • But the recent precip event on the Central Plains with more in the the near-term forecast makes it difficult for wheat to find buyers.
  • Negative outside markets are also limiting risk appetite.

 

Live and feeder cattle futures are posting slight to moderate losses this morning.

  • Light cash cattle trade took place in Texas and Kansas yesterday at $126, up from the week prior. But nearby futures are already at a premium to these prices, leaving them vulnerable to some light profit-taking.
  • Strength in the U.S. dollar index and broad risk aversion are also encouraging to that end.
  • Traders are also reducing risk ahead of this afternoon's Cattle on Feed Report and what will be an extended holiday from the markets for some.
  • Yesterday's $1.49 slide in Choice boxed beef values and relatively slower movement of 163 loads are adding to the negative tone. Select values did firm 25 cents, however.
  • Strength in the corn market is also encouraging of profit-taking in feeder cattle futures as the market has seen strong gains this week and some feel feeders are due for a correction.

 

Lean hog futures are off to a narrowly mixed start with deferred months favoring the upside.

  • Softness in the cash and product markets is encouraging some light profit-taking in futures again today.
  • Yesterday, the pork cutout value slid $1.13. While this encouraged solid movement of 80.25 loads, it also pulled packer cutting margins further into the red.
  • This has led to mostly steady cash hog bids, with scattered lower bids. The Midwest storm the past two days continues to disrupt transportation, but most packers are thought to be bought ahead on near-term needs that are reduced due to the upcoming holiday.
  • Traders are also preparing for what is expected to be a negative Cold Storage Report. Pork stocks at the end of November are anticipated to be record large.
  • Negative outside markets due to shaken confidence lawmakers and the president will reach a deal on the fiscal cliff and a decline in consumer sentiment for month-end are also limiting buying interest.
     
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