Market Snapshot, 8:30 am CT (VIP) -- December 10, 2012

December 10, 2012 02:46 AM
 

Corn futures are 3 to 8 cents lower as traders prepare for tomorrow morning's USDA report.

  • Traders are focused on evening positions ahead of tomorrow morning's USDA Supply & Demand Report, which is expected to show carryover up around 19 million bu. from last month due to tepid export demand.
  • Gulf corn basis is 2 to 6 cents lower for winter delivery, which signals there's no fresh export news on the horizon.
  • Positive outside markets could attract some value buying with the start of open-outcry trade, although technicals favor bears as March corn is building on last week's decline.

 

Soybean futures are 3 to 9 cents lower on improved weather in South America.

  • Brazil's soybean region enjoyed scattered rains over the weekend, which is a slight disappointment after more widespread rains were forecast. However, the region is in line for additional showers this week.
  • Traders are also working to even positions ahead of tomorrow morning's USDA S&D Report, which is expected to reflect strong export demand. Traders look for USDA to trim carryover by around 5 million bu. from last month.
  • Gulf soybean basis is 6 cents stronger for December shipment at $1.12 over January futures -- reflecting strong demand.
  • While China's trade surplus unexpectedly narrowed in November, its demand for soybeans remains strong. China imported 4.16 MMT of soybeans in November -- up 3.2% from October. Year-to-date imports are 11.4% above 2011.

 

Wheat futures are mostly 3 to 8 cents lower on spillover from neighboring markets.

  • Wheat is seeing spillover pressure from neighboring markets, although a slightly weaker tone in the dollar index is keeping losses in check.
  • USDA announced a 115,000 MT wheat sale to Egypt for 2012-13, split between soft red winter and soft white wheat. This business was announced last week by Egypt's GASC.
  • Also positive for wheat futures this morning is news Argentina will reduce 2012-13 wheat exports to 4.5 MMT from 6 MMT in 2011-12 due to declining crop estimates.
  • But traders want to see proof of improved demand for U.S. wheat before extending long positions.

 

Live cattle futures are called lower in reaction to Friday's lower cash trade.

  • Cash cattle trade last Friday was $1 to $2 lower than the previous week around $124 in the Plains. December live cattle ended last week at about a $2 premium to the cash market, which raises the risk of profit-taking this morning.
  • Additional pressure on live cattle futures is expected to come on macro-economic worries as euro-zone debt concerns and the fiscal cliff issue linger.
  • Meanwhile, feeder cattle futures could enjoy short-covering this morning due to weakness in the corn market.

 

Lean hog futures are called lower on expectations for a softer cash market.

  • Lean hog futures are called lower on followthrough from last week's losses and expectations for a weaker tone to the cash market to start the week.
  • Some packers saw margins inch back into the black late last week, but the cash market is still expected to be steady to weaker today as early week supplies have been secured.
  • With December lean hogs expiring this week, February hog futures will be watching the cash market more closely. The contract holds around a $2 discount to the cash index, which should help to limit followthrough selling pressure this morning.
     
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