Market Snapshot, Noon CT -- (VIP) -- December 11, 2013

December 11, 2013 05:52 AM

Corn futures continue to enjoy gains mostly around 1 to 2 cents.

  • The market continues to respond positively to USDA's larger-than-expected cut to its U.S. carryover estimate for corn.
  • Also, USDA's announcement of a 120,000 MT corn sale to unknown destinations for 2013-14 reminds of strong demand.
  • Also signaling strong demand, ethanol production rose 31,000 barrels per day (bpd) the week ended Dec. 6, to 944,000 bpd, which is the largest figure since January 2012. Weekly ethanol stocks rose 324,000 barrels to 15.45 million barrels.
  • But buying interest is being kept in check by news China rejected another 59,100 MT cargo of U.S. corn due to the presence of MIR 162 (Syngenta's Agrisure Viptera).
  • But these rejections are being snapped up by other Asian countries, in some cases at discounted prices.
  • Also, Brazil's Celeres consultancy trimmed its 2013-14 corn crop forecast by 400,000 MT to 82.7 MMT. USDA yesterday pegged the country's corn crop at 70 MMT.
  • Gulf basis rose by a penny for January through March delivery at midday, signaling improving export demand.

Soybean futures are marginally to 2 cents higher through the September 2013 contract, with far deferred months slightly lower.

  • The soybean market continues to benefit from USDA's friendly carryover projection yesterday. USDA lowered its ending stocks peg slightly more than anticipated to 150 million bushels.
  • Light support also stems from China National Grain and Oils Information Center's estimate that Chinese soybean production fell 6.5% this year to 12.2 MMT, signaling the country's import needs will remain high.
  • Gulf soybean basis held steady for December and January delivery at midday, but it jumped 5 cents for February delivery, reminding of strong demand.
  • On the other hand, Celeres raised its forecast for the Brazilian bean crop by 1 MMT to 87.2 MMT.

Wheat have firmed from earlier price action to a narrowly mixed tone.

  • After some followthrough selling early this morning, wheat futures are finding light short-covering ahead of this afternoon.
  • Modest strength in the corn and soybean markets along with a weaker dollar are mildly supportive for wheat futures.
  • But buying interest is limited amid demand concerns. Egypt bought 300,000 MT of Romanian and French wheat in its tender, which is the latest concern on that front.
  • According to official Russian customs data, wheat exports the first 10 months of the year of 10.52 MMT were down 26.5% from year-ago.
  • Meanwhile, FranceAgriMer has raised its wheat export forecast for the country to 18.95 MMT (18.26 MMT previously) due to better demand from outside the EU.
  • While frigid temps continue to blanket the Plains, traders' concerns with winterkill remain limited as much of the crop is insulated by snow or ice.

Live cattle futures remain narrowly mixed with nearbys slightly higher and deferred months slightly lower. Feeder cattle futures are mixed with an upside bias.

  • The live cattle market is seeing some light bull spreading activity today as traders wait for cash cattle trade to begin.
  • Improvement in the boxed beef market this morning could lead to more favorable cash prospects. Choice cuts firmed 81 cents to 202.93 per cwt. while Select values slipped 39 cents. Movement was strong at 155 loads.
  • In addition, nearby contracts are benefiting from concerns about stressful cold temps on livestock this week.
  • But higher showlist estimates in Texas, Colorado and especially Nebraska this week could make it difficult for feedlots to get better than steady prices this week.
  • A weaker U.S. dollar index is giving bulls a slight advantage as traders in feeder cattle futures even positions. This is countered by strength in the corn market, however.

Lean hog futures continue to see slight to sharp losses at midday.

  • The lean hog market has given signs a top is in place and that the market is headed lower over the near-term. This is pressuring futures today.
  • Also, the cash hog market is mostly steady to lower today as plentiful supplies is diminishing the impact of producer reluctance to transport market-ready hogs.
  • Average hog weights and head counts continue to rise in Iowa and southern Minnesota and are record-high. Weights ticked 0.7 lb. higher the week ended Dec. 7.
  • The pork cutout value plunged $2.83 this morning, with bellies, hams and loins leading the decline. This did, however, encourage strong movement of 339.56 loads.
  • Selling pressure in the December contract is being limited by the slight discount it holds to the cash hog index two days ahead of its expiration.
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