Market Snapshot, 10:00 am CT (VIP) -- December 4, 2012

December 4, 2012 03:59 AM
 

Corn futures softened to post slight losses through the September contract, while deferred months are narrowly mixed.

  • Traders are booking some profits today after gains yesterday and following a reminder that high U.S. corn prices have destroyed demand. Specifically, Taiwan recently bought corn from Brazil.
  • But downside risk is limited by a weaker U.S. dollar index and recognition that supplies are tight.
  • This along with shipping concerns on the Mississippi River led to a 10-cent surge in Gulf basis for March, though basis slipped 2 cents for immediate shipment.
  • Light pressure also stems from talk 2013 corn plantings in the U.S. may be record-large.
  • Plus, traders remain hesitant to add risk considering the fiscal cliff talk stalemate.

 

Soybean futures have softened to trade roughly 4 to 8 cents lower.

  • Traders are taking some light profits out of soybean today amid a lack of fresh fundamental news and generally lackluster risk appetite.
  • News Taiwan passed on a tender to purchase U.S. soybeans due to high prices is adding pressure, though China is expected to remain a major buyer of U.S. beans.
  • While ongoing rains in Argentina up the odds acres will be switched to beans, the planting delays push back the day exportable supplies will hit the market.
  • Dryness in areas of southern Brazil also help to limit selling interest to profit-taking.

 

Wheat futures are favoring the upside in choppy trade at all three locations.

  • Dollar weakness is encouraging light short-covering in wheat futures, but spillover from corn and soybeans makes it difficult for wheat to find buying interest otherwise.
  • Light support stems from news ABARES has lowered its estimate of Australian wheat production to 22 MMT, which would be down 26% from last season.
  • Traders are also digesting news Ukraine's ag ministry said it's "hopeful" exporters will adhere to an agreed-to cap on wheat shipments, which has already been reached. This reminds the market of the tight supply situation and expectations the U.S. will soon begin to garner a larger share of global business.
  • Meanwhile, dryness on the Plains remains an underlying source of support. The only precip chances in the forecast are late-week snow chances for the Northern Plains.

 

Live cattle futures are off to a slightly to moderately lower start. Feeder cattle futures are enjoying slight gains.

  • Showlist estimates are sharply higher in northern locations and near steady with week ago in Kansas and Texas. This along with negative packer profit margins mean higher cash cattle trade will be hard to come by.
  • Plus, nearby futures remain at a premium to last week's $125 to $126 cash trade, opening the door for light cash trade.
  • But the boxed beef market did get off to a decent if not impressive start yesterday. Choice and Select cuts gained 29 and 39 cents, respectively, and movement was lighter than recent days at 141 loads.
  • Outside markets are a mixed bag today. The dollar index and crude oil futures are under pressure and the stock market is mildly firmer.
  • Softer corn prices are supporting feeder cattle futures.

 

Lean hog futures are posting slight to moderate losses in all but the December contract, which is slightly higher.

  • December lean hogs are benefiting from some light short-covering on ideas the downside was overdone yesterday.
  • But other contracts are being pressured by expectations packer demand will slow as some have seen profit margins slip into the red as cash market gains outpaced those of the product market. Cash hog bids are mostly steady this morning.
  • Also limiting buying interest is the premium December futures still hold to the cash hog index with less than two weeks to expiration.
  • Yesterday, the pork cutout value rose 98 cents, but movement slowed to 26.63 loads.
  • Traders continue to watch for signs the lean hog complex has put in a technical top.
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