Market Snapshot, 10:00 CT (VIP) -- November 20, 2012

November 20, 2012 04:01 AM


Bargain buying returned to the corn market with the open of pit trading and futures are now steady to 3 cents higher.

  • A slightly firmer U.S. dollar index amid a downgrade of France's credit rating encouraged light profit-taking in corn futures early today, but this has since given way to some bouts of short-covering.
  • Sharply higher Gulf corn basis, which signals export demand news may be on the horizon and/or shipping disruptions due to low water levels on the Mississippi River, is also supportive.
  • Congestion in Brazil's ports is causing some buyers (largely of Asian origin) to turn to the U.S. to meet near-term needs.

Soybean futures have improved to narrowly mixed trade with nearby contracts lower and deferred months higher.

  • Traders are reluctant to add risk in soybean futures amid a renewal of euro-zone concerns and ahead of Thanksgiving, especially considering the major chart damage this month.
  • But they are also wary of adding short-positions considering recent signs of still-strong export demand for a limited supply of beans.
  • Most recently, Gulf basis levels this morning rose 4 to 9 cents for nearby delivery, raising speculation China is back buying U.S. soybeans.
  • But expectations a large South American bean crop will ease supply worries in 2013 is limiting gains, especially considering recently improved weather in Brazil.

Wheat futures have improved to post slight gains in nearby contracts at all three locations.

  • As bargain buying returned to the corn market, wheat firmed.
  • The market is benefiting from concerns about deterioration to the U.S. winter wheat crop, as reflected by a 2 percentage-point decline in the amount of wheat rated "good" to "excellent" and a like increase in the amount of wheat rated "poor" to "very poor" in USDA's Crop Condition Report yesterday.
  • News South Korea and Japan are seeking U.S. wheat in recent tenders is supportive as traders hope this signals exporters are turning to the U.S. amid tightening world wheat stocks.
  • Last week Egypt removed Ukraine from its potential list of wheat suppliers, but now Ukraine has asked Egypt to keep it on its list of suppliers. This is creating confusion regarding Ukraine's exportable wheat supply.
  • But negative outside markets and thin trading volume ahead of the holiday is limiting gains.

Live cattle futures are off to a slightly firmer start. Feeder cattle futures are posting slight losses amid light profit-taking.

  • Strength in the boxed beef market yesterday is causing traders to favor the upside as they ready positions for an extended holiday break. Plus, traders expect beef demand to remain strong ahead of the Christmas holiday.
  • This plus a smaller showlist estimate could prop up the cash market. But countering such ideas is the fact packers are cutting in the red and that they are preparing for a shortened kill schedule.
  • Dollar strength and losses in the stock market and crude oil future are limiting gains.

Lean hog futures are off to a narrowly mixed start.

  • December lean hogs are facing profit-taking after yesterday's strong gains as the contract is at a premium to the cash hog index.
  • But traders expect demand to improve following Thanksgiving and for supplies to tighten through year-end and into 2013.
  • Yesterday, the pork cutout value slid 60 cents and movement was lackluster. This gives packers little reason to raise bids. Thus the cash hog market is steady to lower today.
  • Buying interest is also being limited by expectations Wednesday's Cold Storage Report will show record-large frozen pork stocks for the end of October.
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