Market Snapshot, Noon CT -- Advice (VIP) -- December 6, 2013

December 6, 2013 06:04 AM
 

HOG PRODUCERS: CLAIM PROFITS ON 4th-QTR. HOG HEDGES… Hog producers should claim profits on the hedges covering 100% of 4th-qtr. production in December lean hog futures. After a week of very heavy price pressure, December futures are now at a discount to the cash index, which is starting to firm. With just one week until the contract expires, it's time to exit the 4th-qtr. hedge coverage. While we may end up leaving some money on the table, we're not willing to risk the accumulated profits.

We're willing to maintain the hedges covering 50% of expected 1st-qtr. production in February lean hog futures for now. But be prepared to exit this coverage when the market signals a seasonal low is in place.
 

Corn futures are around a penny lower at midday which is a slight improvement from early lows.

  • Trade activity is light heading into the weekend as news is limited.
  • Futures are working on mild gains for the week and traders are watching to see if support at last week's high of $4.33 on March futures will turn into a support area.
  • News is lacking so traders are again focused on China's recent rejections of U.S. corn shipments because they contained GMO material not yet approved by the county. Syngenta has reportedly applied for approval again of its Agrisure Viptera product that has been denied "many times" dating back to 2010.
  • Some export news did surface overnight which is providing light support. USDA reports Taiwan bought 60,000 MT of U.S. corn overnight.
  • Gulf basis is steady in late-morning trading.

 

Soybean futures remain 1 to 7 cents lower with nearbys leading losses.

  • Futures are seeing selling pressure as traders roll out of long positions ahead the weekend.
  • Trading remains confined in a narrowing consolidation range as traders weigh expectations for a large South American crop against strong demand for U.S. soybeans. January futures have again found support just below $13.20.
  • The market is shrugging off the 384,150 MT sale to unknown destinations announced by USDA this morning as large exports are expected.
  • A Reuters report says an Argentine government official says the country is not planning to cut its soy export tax, as was rumored yesterday. But traders are still uneasy about the situation as a cutting of the Argentine export tax would be price-negative for soybean futures.
  • Gulf basis is generally steady in late trading with the exception of a 1-cent gain for January delivery. This follows a 10-cent slide for February delivery noted in early trading.

 

Wheat futures continue to trade narrowly mixed for all three flavors.

  • Spillover pressure from corn and soybeans continues to pressure wheat.
  • Some-covering short due to weather concerns in the U.S. is limiting selling pressure.
  • Frigid temps across winter wheat country and wintry precip for the Mid-South could take a toll on the winter wheat crop. But crop concerns are limited as much of the crop is protected by snow/ice.
  • The U.S. dollar index remains firmer, but has backed well off earlier highs. As a result, spillover pressure on wheat has faded.
  • News Russian wheat prices rose for the ninth consecutive week on concerns about unfavorable weather there diminish concerns about export competition from the Black Sea region.

 

Live cattle futures continue trade slightly lower while feeder cattle futures are steady to higher.

  • Live cattle futures are under light pressure following yesterday's sharp losses.
  • Thursday's slump dropped December live cattle below this week's $132 cash cattle traded noted in the Southern Plains, which is steady with a week earlier.
  • Declines in wholesale beef prices are attracting some selling pressure. Choice boxed beef fell 39 cents this morning while Select dropped $1.94. Movement is a light 86 loads. As a result, demand concerns are starting to surface again.
  • Feeder cattle futures are slightly higher on short-covering following yesterday's decline.

 

Lean hog futures are slightly lower on the negative technical picture.

  • Lean hog futures are lower amid followthrough selling given the technical damage done on the charts this week.
  • Packers are still cutting in the black but have ample supplies. Cash hog are steady to $1 lower as a result.
  • The December lean hog contract is now trading at around a $1 discount to the cash index, which should help to limit selling pressure.
  • Providing some selling pressure is the decline in the pork cutout value, which fell $1.85 this morning. Movement slipped a little, too, but is still healthy at 185.64 loads.
     
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