Market Snapshot, 10:00 am CT (VIP) -- November 30, 2012

November 30, 2012 04:15 AM
 

Corn futures briefly improved to choppy trade with the open of pit trading, but the market has since softened to trade mostly 4 to 8 cents lower.

  • Corn futures improved earlier this week on technical-based fund buying after the market posted closes above the 50-day moving average beginning last Friday. Now traders are taking advantage of those gains by booking profits ahead of the calendar flip.
  • Light pressure also stems from news China's National Bureau of Statistics says 2012 corn production rose 8% from last year to a record 208.12 MMT. Countering this, however, is recognition that demand growth has outpaced supply growth.
  • Deliveries against December corn futures totaled 246 contracts, which was right in the middle of expectations. Those looking for no deliveries, however, are using this as a "reason" to be sellers today.

 

Soybean futures have softened to post double-digit losses in all but far-deferred months.

  • Soybean traders are reducing their risk exposure ahead of the week. Month-end positioning is also weighing on the market.
  • Ongoing uncertainty about whether lawmakers will indeed address the fiscal cliff remains a damper on risk appetite, as does recognition euro-zone issues are far from resolved.
  • A wetter forecast for southern Brazil and Argentina is another source of pressure. The rain will benefit Brazil's bean crop, and in Argentina it ups the odds unplanted corn acres will be seeded to beans, though flooding also raises development concerns.
  • Fresh export demand and a return of fund buying is needed to signal soybeans' recent rally was more than a corrective move.
  • Recent steady basis does not indicate fresh export news is near.

 

Wheat futures have softened to post losses in the teens in many Chicago and Kansas City contracts, with Minneapolis seeing slightly lighter losses.

  • Much heavier-than-expected deliveries against December Chicago wheat futures at 2,119 contracts is weighing on the wheat market. This along with spillover from the corn and soybean markets is encouraging traders to book profits ahead of month-end.
  • Pressure also stems from news India's cabinet approved an additional 2.5 MMT of wheat from government stocks for export. This is in addition to the 2 MMT already allowed.
  • This raises concerns U.S. wheat may still struggle to attract export demand, even though Black Sea region supplies are dwindling.
  • Also, it is too early in the growing season for traders to get overly concerned about dryness in the U.S. Southern and Central Plains, although HRW crop condition ratings are record low ahead of dormancy.

 

Live cattle futures are slightly to sharply lower with nearby contracts leading the decline. Feeder cattle futures are favoring the downside in narrowly mixed trade.

  • Traders started today's session with some light profit-taking as they waited for cash cattle trade to begin, which then encouraged some technical selling as futures moved through near-term support levels.
  • Futures prices indicate the market expects near steady prices compared with last week's $127 to mostly $128 trade, but a wide spread between bids and asking prices indicates trade may not get underway until late today.
  • Mixed boxed beef market action this week adds some cash market uncertainty, though movement has been relatively strong.
  • Further, packers continue to struggle with deeply negative cutting margins. This has encouraged some to trim their slaughter schedules.
  • Outside markets are mildly supportive. The U.S. dollar index is under pressure while the stock market is just above unchanged.

 

December lean hogs are slightly firmer this morning while deferred months are slightly lower.

  • December lean hogs are benefiting from ideas the cash hog and pork product markets will remain strong through the Christmas holiday season. Gains in the contract are impressive considering the $4-plus premium it holds to the cash hog index.
  • Deferred months are seeing light profit-taking to wrap up the month of November after recent, strong gains.
  • But downside risk for these remains limited to corrective selling as supplies are expected to tighten the first quarter of 2013.
  • Profit margins have narrowed substantially this week as packers paid higher prices for cash hogs. But so long as their margins remain in the black, they will likely keep kill lines full. Cash hog bids are steady to higher again today.
  • The pork cutout value dropped 52 cents yesterday, but it is still up sharply for the week.
     
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