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

November 28, 2012 04:11 AM
 

Corn futures improved to mostly firmer trade with the start of pit trading.

  • Profit-taking on dollar strength and general risk aversion put early pressure on the corn market, but as wheat firmed, some light short-covering took place in corn.
  • News Japan's imports of U.S. corn are expected decline 29 percentage points from 2011-12 to 57% this marketing year as the country plans to import 30% of its needs from Brazil reminded the market that high prices have destroyed demand.
  • But concerns about tight supplies and the fact that weather in South America is less than ideal in some areas is helping spark a recovery from early losses. Notably, dryness is a concern in southern Brazil, while a return of rain in Argentina may cause producers to switch acres to beans.

 

Soybean futures have trimmed losses to around 2 to 7 cents.

  • Soybean futures are seeing light profit-taking after strong gains yesterday, encouraged by broad risk aversion and dollar strength.
  • But pressure is being limited by confirmation that some bargain buying is returning to the export market. This morning, USDA announced a 290,000 MT daily soybean sale to China for 2012-13.
  • Supplies are tight, as reflected by basis strength around the country, but the market continues to monitor weather in South America as a large crop there could ease tight supplies.
  • In Brazil, there is concern about dryness in the southern part of the country, though the forecast does hold chances for precip. Meanwhile, soggy conditions in Argentina up the odds unplanted corn acres will be switched to beans, though this also raises yield concerns.

 

Wheat futures firmed with the open of pit trading to post gains of 3 to 6 cents at all three locations.

  • Buying interest returned to the wheat market with the open of pit trading as the market's fundamentals helped futures to reverse early losses. Strength in the U.S. dollar index is limiting gains, however.
  • Concerns about poor winter wheat emergence and ongoing dryness on the U.S. Plains remains a source of underlying support.
  • But buying interest is being limited by ongoing uncertainty about the Ukraine export situation. The country's ag ministry has now said exporters can continue to ship wheat even past the previously established 5.5 MMT cap. Meanwhile, the country previously said it will halt exports Dec. 1.

 

Live cattle futures are narrowly mixed this morning, while feeder cattle futures are slightly to moderately lower.

  • Dollar strength and month-end profit-taking is weighing on the cattle complex today.
  • Adding light pressure, Choice cuts slid 77 cents yesterday, though Select cuts firmed by the same amount and movement was strong at 194 loads.
  • While packers are cutting in the red, tighter showlist estimates could give feedlots an edge. Light cash cattle trade took place at $128 Monday in Texas, which was steady with the week prior.
  • Strength in the U.S. dollar index and broad risk aversion are also weighing on the cattle markets.

 

Lean hog futures gapped higher on the open and are enjoying moderate to sharp gains, with nearby contracts leading to the upside.

  • Lean hog futures are enjoying followthrough buying which triggered technical buy stops on the way up.
  • A $1.63 surge in the pork cutout value yesterday and strong movement of 194.13 loads has traders optimistic retailer demand is strong for the Christmas season.
  • This has in turn supported the cash hog market as packers are still working to secure late-week kill needs after downtime last week for Thanksgiving.
  • While supplies are currently plentiful, the market is looking ahead to 2013, when supplies are expected to tighten.
  • Also, the lean hog index was projected higher the past two days, signaling a bullish near-term cash outlook.
     
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