Market Snapshot, 10:00 CT (VIP) -- December 31, 2012

December 31, 2012 04:05 AM
 

Corn futures are 3 to 4 cents lower through the March 2014 contract.

  • Traders are taking a cautious approach in the last trading hours of the year. As a result, buying interest is limited as bears have short-term technical momentum on their side while the fiscal cliff concerns persist.
  • With fresh news limited and many traders taking an extended holiday vacation, the bulk of the price action is end-of-the-year positioning.
  • Corn futures are holding just above key, near-term support at last week's lows. If that support is violated, it could trigger technical-based selling in the thin holiday trade.

 

Soybean futures have extended losses slightly from earlier to trade 12 to 19 cents lower in most contracts.

  • Fiscal cliff concerns continue to weigh on soybean futures this morning. Traders are shedding risk as they close their books for the year.
  • Additional pressure is coming from ongoing favorable weather conditions in Brazil. More rains are forecast for this week, which will boost crop development.
  • Traders are ignoring news that an unknown destination purchased 140,000 MT of U.S. soybean for 2012-13. Traders generally attribute unknown bean buys to China, but last week's sales report showed changes in destinations from unknown buyers to Germany, Indonesia and Vietnam.

 

Wheat futures are 6 to 8 cents lower in Chicago, 8 to 9 cents lower in Kansas City and 8 to 10 cents lower in Minneapolis.

  • Wheat futures are being pressured by spillover from neighboring markets and end-of-year positioning.
  • Wheat futures are holding just above near-term support at last week's lows. Violation of this support could increase technical-based selling.
  • Macro-economic concerns are also weighing on the market as a deal to avoid going over the fiscal cliff remains elusive.

 

Live cattle futures opened slightly lower, but have turned mostly firmer. Feeder cattle futures are slightly to moderately higher.

  • Cattle traders are generally brushing aside concerns about the U.S. economy going over the fiscal cliff. That's being made possible by the limited reaction in the U.S. stock market so far this morning. That suggests investors expect an 11th-hour agreement.
  • Selling interest is limited to mild profit-taking in some live cattle contracts despite the premium nearby futures hold to the cash market. With feedlot supplies tightening relative to year-ago, traders are content to keep some premium in the market.
  • The light and choppy trade suggests price action is mostly year-end positioning.
  • Feeder cattle futures are being supported by lighter-than-expected selling interest in live cattle and pressure on the corn market.

 

Lean hog futures are under heavy pressure in reaction to last Friday's Quarterly Hogs & Pigs Report.

  • Lean hog futures gapped sharply lower in reaction to last Friday's Hogs & Pigs Report. Instead of showing contraction in the pork industry, as expected, most categories came in near year-ago levels. The report points to at least steady pork production in 2013 compared to this year.
  • Fund selling is also weighing on the market. Funds are lightening their long exposure amid fiscal cliff uncertainties and on year-end positioning.
  • Cash hog bids are steady at most Midwest locations amid light trade. Many slaughter plants are working reduced shifts today and are closed Tuesday.
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