Market Snapshot, 10:00 am CT (VIP) -- December 26, 2012

December 26, 2012 04:09 AM
 

Corn futures got off to a slightly firmer start, but they have softened to trade mostly 2 to 6 cents lower.

  • Trading volume in the corn market is thin as many have taken time off from the markets for the holidays. This has led to choppy action this morning.
  • Spillover from the bean pit has made it difficult for corn to find buyers as fresh news is limited today.
  • Gulf basis is steady this morning, signaling export demand remains lackluster.
  • And fiscal cliff unease is making traders more likely to remove risk than add it.

 

Soybean futures opened firmer but quickly softened, now trading around 7 to 13 cents lower.

  • Soybean futures are facing profit-taking this morning after posting gains Monday. This has been amplified by thin holiday trading volume.
  • Traders remain unwilling to add risk with the fiscal cliff looming at year-end.
  • But selling interest is also limited on fresh export news. USDA announced two daily sales this morning -- a 115,000 MT bean sale to China for 2012-13 and a 108,000 MT sale to an unknown destination for 2012-13.
  • But favorable crop prospects in South America are gaining more attention. Southern and Central Brazil are expected to benefit from rains over the next five days.

 

Wheat futures are the downside leader this morning, posting double-digit losses in Chicago and Kansas City.

  • Wheat futures are facing spillover pressure from corn and soybeans.
  • News Egypt has raised its export cap to 2.5 MMT from 2 MMT is adding light pressure.
  • Traders are ignorning weakness in the U.S. dollar index as well as the risk of freeze damage to a poorly established winter wheat crop.
  • U.S. wheat has recently benefited from signs tightening global wheat supplies are finally translating to improved demand for U.S. wheat, but that is also on the backburner this morning.

 

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

  • Deferred months initially faced light pressure as they are at a steep discount to last week's mostly $126 cash cattle trade.
  • But this quickly gave way to light short-covering as last week's Cattle on Feed Report pointed to tightening supplies in 2013.
  • But uncertainty about the outcome of the U.S. fiscal cliff and this week's cash cattle trade prospects will limit interest toward either the long or short side of the market.
  • A weaker U.S. dollar index and gains in the stock market are giving bulls a slight advantage.
  • Feeder cattle futures are benefiting from weakness in the corn market this morning.

 

Lean hog futures are enjoying slight gains this morning.

  • News is limited today so traders are booking light profits after the market's firmer close Monday.
  • Also, packers are thought to be generally well supplied for back-to-back holiday-shortened weeks.
  • But the winter storm in the eastern Corn Belt could disrupt transportation. Cash hog bids are expected to be mostly steady, but some firmer bids may arise in the affected region.
  • Light pressure also comes from the steep premium nearby futures hold to the cash hog index.
  • But downside risk is also limited by positioning ahead of Friday's Hogs & Pigs Report, which is expected to show all hogs and pigs as of Dec. 1 at 99.1% of year-ago levels.
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