Market Snapshot, 10:00 am CT (VIP) -- December 3, 2012

December 3, 2012 04:07 AM
 

Corn futures have softened a touch amid profit-taking to trade 4 to 5 cents higher.

  • Corn futures are benefiting from spillover from strong gains in the soybean market.
  • Also, traders are more willing to add risk as the Greek bond buyback offer exceeded expectations and Chinese economic data was favorable.
  • Meanwhile, wet conditions in Argentina and lingering dryness concerns in southern Brazil remain a source of support.
  • Fund buying to start the month of December is also supporting corn futures today.
  • Gulf basis softened 4 cents for December delivery, while deferred months were steady. This suggests fresh demand news is lacking.

 

Soybean futures continue to enjoy gains mostly ranging from 12 to 14 cents.

  • Soybean basis at the Gulf surged 9 and 10 cents for December and January delivery, respectively, while deferred delivery is steady. This signals fresh export news likely lies ahead. In addition, shipping issues on the Mississippi River make supplies even harder to come by.
  • China is expected to be a buyer of U.S. soybeans especially as crushers are preparing for their peak production period during the Lunar New Year celebration in February.
  • A weaker U.S. dollar index and gains in crude oil futures are also supportive.
  • While needed rains fell on dry areas of southern Brazil this weekend, the weather pattern is expected to turn drier again this week, which is raising production concerns.
  • Meanwhile, delayed corn planting in Argentina ups the odds some acres will be switched to beans, but it also raises concerns about development of already planted beans and pushes back the expected export date.

 

Wheat futures have pared gains to roughly 2 to 5 cents.

  • Fundamental support for wheat futures is coming from Egypt's weekend purchase of 400,000 MT of wheat, including 280,000 MT of U.S. supplies. The tender signals U.S. wheat is again competitive on the world market and Black Sea supplies are tight.
  • In addition, high winds on the Plains are further drying out depleted soil moisture reserves. Plus there is little rain in the 10-day forecast for HRW country.
  • Outside markets are also supportive this morning. The U.S. dollar index is under pressure while commodities are generally firmer amid a broad, risk-on attitude.

 

Live cattle futures are slightly lower. Feeder cattle futures are also slightly lower.

  • Futures are being pressured by last week's disappointing lower cash cattle trade at $125 in the Plains. December futures are at roughly a $1-plus premium to those cash prices.
  • Adding to the negative tone, the boxed beef market softened both in terms of prices and movement Friday, with Choice cuts sliding $1.00 and Select down 70 cents. Movement slowed to 167 loads.
  • Boxed beef action must impress to encourage packers to raise bids this week. They continue to deal with deeply negative cutting margins.
  • But a risk-on attitude across the investment world is limiting pressure. Traders are encouraged by ongoing signs recent moves to stimulate China's economy are working.
  • Gains in the corn market are weighing on feeder cattle futures.

 

Lean hog futures are off to a narrowly mixed start.

  • Traders in the lean hog market are weighing strength in the cash hog market and a general risk-on stance among market participants against signs the market may have put in a technical top.
  • And while the cash hog market has been on the rise, the gap between front-month futures prices and the cash hog index remains wide, with futures at a premium to cash.
  • Cash hog bids are steady to higher today as packers are working with profitable margins.
  • On Friday, the pork cutout value rose 59 cents but movement slowed to 40.5 loads.
  • A weaker dollar and a firmer tone in the stock market are also supportive.
     
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