Market Snapshot, 10:00 am CT (VIP) -- November 27, 2012

November 27, 2012 04:15 AM
 

Corn futures extended gains slightly with the open of pit trading to trade 3 to 5 cents higher.

  • Corn futures are benefiting from spillover support from strong gains in both the soybean and wheat markets this morning. Technical support stems from the fact that December futures closed above the 50-day moving average the past two sessions.
  • Plus strength in basis around the country reminds the market of tight supplies.
  • And bulls remain hopeful export demand is improving, as last week's weekly export sales tally topped expectations. But countering this are steady to lower Gulf basis levels today and a disappointing export inspections figure yesterday.
  • Meanwhile, the South American weather watch continues. A return of rainy conditions in Argentina up the odds some unplanted corn acres will be switched to beans. Plus, port congestion in Brazil remains a concern for Asian buyers.

 

Soybean futures extended gains with the start of pit trading to post gains in the mid- to upper teens with nearby contracts leading to the upside.

  • Concerns about dryness in southern areas of Brazil are supporting soybean futures today, as a large South American crop is essential in light of the small U.S. bean crop.
  • Soybeans were lifted overnight by commercial buying, which signals more export news is on the horizon. There is some talk China is shopping for U.S. soybeans.
  • Soybeans are also benefiting from signs economic stimulus measures in China are working. Traders are optimistic this will translate to ongoing soybean demand strength among Chinese importers.
  • Soybeans are also benefiting from ideas the downside was overdone on the recent, sharp price break.

 

Wheat futures have improved to post gains in the teens at all three locations. Kansas City wheat is the upside leader.

  • Wheat futures are benefiting from yesterday's record-low, pre-dormancy crop condition ratings from USDA; just 33% of the crop was rated "good" to "excellent," which is well below the previous fall record-low of 43% in 1999-2000.
  • Plus the forecast holds little chance of relief for winter wheat country.
  • The market is also benefiting from news China's wheat imports are expected to rise 10% in 2013 as production is expected to decline while consumption is expected to rise.
  • Ukraine is rapidly exporting wheat ahead of the Dec. 1 ban on wheat exports. The U.S. is eventually expected to benefit from this export halt.

 

Live cattle futures got off to a mixed start, but futures have since improved to post slight gains. Feeder cattle futures are posting slight losses amid firmer corn prices.

  • The start of light cash cattle trade at $128 in Texas yesterday is supporting nearby contracts, as the market feels this is a sign most cash cattle trade will take place at higher prices again this week.
  • Showlist estimates are tighter this week due to a sharp drop in Nebraska numbers.
  • But countering this is a disappointing start in the boxed beef market yesterday, as both cuts slid in price and movement was just 119 loads.
  • Buying interest is also being limited by strength in the U.S. dollar index this morning. Losses in the stock market and crude oil futures also point to diminished risk appetite among investors.

 

Lean hog futures are posting slight losses this morning.

  • Traders are engaging in some followthrough profit-taking after yesterday's low-range close following strong gains last week. A firmer dollar is also encouraging to this end.
  • Traders are also watchful for signs of a market top, especially as nearby futures are at a premium to the cash hog index.
  • But for now, profit-taking is the extent of selling interest as the cash hog market is steady to firmer as packers are working to catch up on supplies after Thanksgiving. As a result, packers are paying steady to higher prices for cash hogs.
  • Also, packers continue to enjoy profitable margins, which were improved by gains in the pork cutout value yesterday. This signals retail demand is picking up ahead of Christmas.
     
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