Market Snapshot, 8:30 am CT (VIP) -- November 27, 2012

November 27, 2012 02:45 AM
 

Corn futures are 1 to 2 cents higher on spillover from soybeans and demand hopes.

  • Corn is enjoying followthrough from yesterday's gains and spillover from soybean futures, although slight strength in the U.S. dollar index is limiting buying.
  • Traders continue to note there are indications export demand is on the rise, which was bolstered by last week's stronger-than-expected weekly export sales data. But export inspections were a disappointment yesterday and Gulf basis is steady to 2 cents lower this morning.
  • A return to a rainy weather pattern across Argentina's main corn area signals some of the unplanted area will be seeded to soybeans, raising concern about the size of this year's South American corn crop.

 

Soybean futures are mostly 5 to 10 cents higher, with nearby contracts leading gains amid South American weather concerns.

  • While northern production areas of Brazil benefited from recent rains, building drought conditions in central and southern growing areas of the country have renewed concerns that yield potential is being trimmed. However, the forecast calls for scattered showers in areas of Parana and Rio Grande do Sul over the next five days.
  • Soybeans were lifted overnight by commercial buying, which signals more export news is on the horizon. However, Gulf soybean basis is 1 to 4 cents lower for nearby shipment.
  • Slight strength in the U.S. dollar index is resulting in a more cautious tone across the commodity sector this morning. Gold is weaker, but crude oil is firmer as investors weigh news the euro-zone has agreed to bailout Greece against what seems to be limited progress in fiscal cliff talks among U.S. lawmakers.

 

Wheat futures are 6 to 8 cents higher on concerns about the winter wheat crop.

  • The final crop condition ratings of the year from USDA reflected continued deterioration of the winter wheat crop. State crop summaries note the need for rains to stabilize conditions ahead of dormancy.
  • Our weighted Crop Condition Index shows the HRW crop dropped another 6 points to a pre-dormancy record low of 282, while the SRW crop dropped 5 points to 374.
  • But without fresh export news, upside potential in the wheat market is limited. Traders remain hopeful the U.S. will garner more business once Ukraine halts exports, but the U.S. currently lacks the price competitiveness of other nations.

 

Live cattle futures are called to open steady to weaker on a disappointing start to the boxed beef market.

  • Traders are disappointed by the lackluster start to the week in the beef market, as Choice values slipped 22 cents and Select was down 14 cents with just 119 loads changing hands.
  • Light cash cattle trade was also reported yesterday at $128 in Texas, which is steady with last week. However, traders aren't convinced this will set the tone for the remainder of cash sales this week.
  • Outside markets aren't supportive of commodity buying this morning, as the U.S. dollar index is firmer. The U.S. stock market opened mildly weaker this morning.

 

Lean hog futures are called steady to weaker on followthrough from yesterday's poor close.

  • Futures are vulnerable to profit-taking due to the premium nearby futures hold to the cash index. But selling should be limited by better-than-expected packer demand for hogs.
  • The cash hog market is called steady to firmer again today as some packers found themselves short-bought after Thanksgiving. But others say they are having no difficulty securing supplies.
  • The pork cutout value firmed 42 cents yesterday, but movement was slow at just 41.25 loads. Packers are enjoying profitable margins.
     
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