Market Snapshot, 10:00 am CT (VIP) -- December 5, 2012

December 5, 2012 04:00 AM
 

Corn futures have improved to post gains of 3 to 5 cents on spillover from soybeans.

  • Corn is enjoying spillover from soybeans, although upside potential is limited by strength in the dollar index.
  • Also limiting buying is a steady to weaker tone in Gulf basis this morning, which signals there's no fresh demand news on the horizon.
  • But ongoing weather concerns in Argentina are supportive for prices. Planting delays due to heavy rains put total production in question.
  • Corn futures are stuck in a range above the 50-day moving average but below highs set last week.

Soybean futures improved with the start of open-outcry trade to post gains of 9 to 15 cents in most contracts.

  • Talk that China is back buying beans is lifting futures this morning. Traders point to improvement in Gulf soybean basis for immediate delivery as evidence of fresh demand.
  • Traders are also keeping a close eye on the South American weather situation. While recent rains are benefiting crops in northern and central Brazil, dry conditions in southern Brazil point to reduced yield potential.
  • Also supportive for oilseed markets this morning is Statistic Canada's lower-than-expected canola crop estimate of 13.31 MMT.
  • The 50-day moving average, currently at $15.10, marks resistance for January soybeans.

Wheat futures have improved to post slight gains on spillover from corn.

  • Buying in the wheat pit is being limited by Stats Canada's higher-than-expected all wheat crop estimate of 27.205 MMT, although the figure came within the range of traders' expectations.
  • The weather situation in the Southern Plains remains supportive for the market, although isn't the focus of price action today. The HRW wheat crop will enter dormancy in the toughest shape since condition ratings began.
  • Traders are keeping a close eye on outside markets. Strength in the U.S. dollar index is limiting buying in wheat futures. Wheat is also keeping a close eye on corn for direction.

Live cattle futures are steady to slightly lower, with feeder futures mixed.

  • Pressure on live cattle futures is being limited by slight strength in the U.S. stock market, which is being lifted by better-than-expected private sector jobs data.
  • Cash sources say they expect packers to emerge with cash cattle bids today, although expectations for lower bids will be met with resistance by feedlots.
  • December live cattle are trading at a slight discount to last week's $126 to $128 cash cattle trade, with February cattle trading at a premium.

Lean hog futures are mixed, with nearbys slightly lower on light profit-taking.

  • With December lean hog futures trading at around a $2 premium to the cash index, buying is limited ahead of next week's expiration of the contract.
  • But selling in lean hogs is being limited by ongoing strength in the cash market despite declining packer profit margins.
  • While pork cutout values firmed 23 cents yesterday, packers' margins worsened due to a quicker pace of gains in the cash market. As a result, gains in the cash market have stalled.
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