Market Snapshot, 10:00 am CT (VIP) -- November 29, 2012

November 29, 2012 04:12 AM
 

Corn futures have seen choppy trade this morning and futures are currently mixed with the December through July contracts lower and farther deferred months mostly firmer.

  • Traders were disappointed by this week's weekly export sales report that reflected lackluster demand. Sales of 236,100 MT for 2012-13 and 27,400 MT for 2013-14 fell short of expectations.
  • Also reminding the market of this is softer Gulf basis levels for immediate delivery this morning, while deferred months are steady.
  • Traders are also booking some profits ahead of the calendar flip to December.
  • But countering this is news the International Grain Council trimmed its 2012-13 global corn carryover forecast by 1 MMT to 116 MMT.
  • In addition, investor risk appetite is firmer this morning thanks to talk of a forth round of quantitative easing, stronger-than-expected pending home sales for October and optimism that fiscal cliff talks will ultimately result in a deal.
  • A return of rainy weather in Argentina is also limiting selling interest as it means more corn acres will likely be switched to beans.

 

Soybean futures continue to enjoy gains around 2 to 9 cents.

  • While this morning's weekly soybean export sales of 319,100 MT slowed notably from recent weeks and fell short of expectations, the overall pace of exports remains well ahead of the previous marketing year and sales of soy products remains impressive.
  • Soybeans are also benefiting from news trade sources expect China will need 3 MMT to 4 MMT of beans for delivery during the first quarter and that the head of China's state grain policy agency says the country will import around half of the world's soybean exports this year. All of this indicates the country will remain a major buyer of U.S. bean supplies.
  • Traders are largely ignoring news International Grains Council raised its global soybean carryover projection for 2012-13 by 1 MMT to 28 MMT.

 

Chicago and Kansas City wheat futures remain mixed with most contracts favoring the downside. Minneapolis wheat is also now favoring the downside in mixed trade.

  • Selling interest is limited to profit-taking in wheat futures as the latest National Drought Monitor showed drought expanded and intensified across winter wheat country.
  • The International Grains Council today trimmed its global wheat production forecast for 2012-13 by 1 MMT but raised its carryover stocks projection by a like amount, rendering the update largely a nonevent.
  • Light pressure comes from a disappointing weekly wheat export sales tally of 279,300 MT for 2012-13.
  • Also, uncertainty as to whether Ukraine will cap wheat exports is encouraging light profit-taking. The country has increased its limit on 2012-13 exports to 5.8 MMT and the Ukraine Grain Association says it believes the country could export 6.5 MMT of wheat without causing domestic shortages.

 

Live cattle futures got off to a narrowly mixed start, but the market has since firmed to post slight gains. Feeder cattle futures are narrowly mixed.

  • The boxed beef market strengthened yesterday after a choppy start to the week. Choice values rose 39 cents, Select cuts firmed 93 cents and movement was strong at 204 loads.
  • This plus tighter showlist estimates could give feedlots an edge in cash cattle negotiations, though negative packer cutting margins raise some uncertainty. Bids and asking prices remain wide and inquiry has generally been light, signaling trade may not start until Friday.
  • Outside markets are also supportive of commodity buying amid strong pending home sales data and optimism about fiscal cliff talks.
  • But a disappointing weekly beef export sales tally of 11,800 MT is limiting buying interest.

 

Lean hog futures are steady to moderately higher, with the December contract leading gains.

  • The fact the December contract is leading the charge higher despite being at a nearly $6 premium to the cash hog index signals traders fully expect recent strength in the cash market to continue. The CME cash hog index has risen the past three days.
  • Adding to such ideas, the pork cutout value rose another 74 cents yesterday on solid movement of 89.75 loads. Over the past five days it has risen $8.48, strengthening packer profit margins and making them more willing to pay up for supplies.
  • Friendly outside markets are also encouraging followthrough buying today.
     
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