Market Snapshot, 10:00 am CT (VIP) -- December 28, 2012

December 28, 2012 03:59 AM
 

Corn futures weakened with the start of open-outcry trade to trade mixed with nearbys favoring the downside.

  • Strength in the U.S. dollar index and a disappointing weekly export sales tally are weighing on corn futures this morning.
  • Weekly export sales tally of 104,300 MT were down 37% from the four-week average and were below traders' light expectations.
  • Traders also note the increase in corn movement due to December delivery of forward contract sales made earlier. This is weighing on interior basis levels.
  • March corn futures are hovering above support at last week's low of $6.87 1/2.

 

Soybean futures remain near session lows but futures are posting gains of 2 to 3 cents on short-covering.

  • While well off session highs, soybean futures have favored a firmer tone with losses limited by short-covering.
  • But futures softened as traders digested this morning's weekly export sales data, as it showed net sales of just 87,000 MT -- coming in below light expectations.
  • Traders generally aren't impressed by this morning's announcement by USDA of soybean sales of 165,000 MT to China and soyoil sales of 30,000 MT to unknown -- all for 2012-13, as they expect China to soon switch to Brazil to meet needs.
  • January soybean futures so far have remained confined within the boundaries of yesterday's trading range, hovering above support at yesterday's low of $14.15 3/4.

 

Chicago wheat futures are up 1 to 4 cents, while Kansas City and Minneapolis wheat are mixed with nearbys favoring the upside and deferred months the downside.

  • Wheat futures firmed after the weekly export sales data showed sales well above expectations of 1,009,000 MT, as it signals U.S. prices are once again competitive on the global market.
  • But futures have since seen bouts of profit-taking due to strength in the U.S. dollar index due to concerns about the economy if the U.S. goes over the fiscal cliff.
  • The inability of wheat to sustain buying on positive export sales data signals traders have a prove-it attitude toward demand.
  • After seeing trade above yesterday's high, March Chicago wheat has slipped back to within the boundaries of yesterday's trading range.

 

Live cattle futures are off to a slightly higher start. Feeder cattle futures are enjoying slight to moderate gains.

  • After light cash cattle trade was reported in Nebraska yesterday at $127, which is up $1 from last week, traders anticipate more of the same today.
  • But upside potential is being limited by the more than $2 premium December futures hold to cash expectations -- especially ahead of next week's expiration of the front-month contract.
  • Buying is also being limited by weakness in the U.S. stock market as investors remain cautious as lawmakers return to discuss the fiscal cliff.

 

Lean hog futures opened mixed but have softened to favor the downside.

  • Traders expect this afternoon's Quarterly Hogs & Pigs Report to reflect a shrinking sow herd due to high grain prices, as farrowing intentions are expected to be below year-ago levels. But they are nevertheless unwilling to ask risk ahead of the report.
  • Light pressure also stems from a $1.14 slip in pork cutout values yesterday to push packers' profit margins back into the red.
  • But due to tightening supplies and a holiday-shortened kill schedule, the cash hog market is mostly steady this morning.
  • Traders are also keeping a close eye on outside markets, particularly the Dow Jones Industrial Average, which is weaker this morning.
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