Market Snapshot, Noon CT -- (VIP) -- December 16, 2013

December 16, 2013 05:53 AM

Corn futures have trimmed early losses but are fractionally to 1 cent lower.

  • Spillover strength from soybean futures has trimmed early losses in corn futures. But bearish attitudes prevail in the corn market due to concerns about exports to both China and Mexico.
  • Traders are leery about news Mexico's ag ministry announced the country is restarting its import tariffs on corn at a rate of 20% (possibly due to the ongoing country-of-origin labeling dispute). It's unclear whether this will apply to U.S. corn due to NAFTA.
  • The market continues to feel pressure from concern China will reject additional shipments of U.S. corn due to the presence of MIR 162 (Syngenta's Agrisure Viptera).
  • Today's weekly exports inspections report also disappointed traders. USDA says 25.077 million bu. passed inspections, which is down 15 million bu. from the previous week and well below expectations of 33 million bu. to 38 million bushels.
  • But spillover support from soybean futures saw the March contract bouncing off its test of the December low just under $4.20.
  • Gulf corn basis is unchanged in late-morning trading.

Soybean futures are posting 7- to 14-cent gains through the August 2014 contract with deferreds up 2 to 5 cents.

  • Soybean futures are higher on the very positive weekly export inspections figure released this morning by USDA.
  • Soybeans surged higher on news of another strong week of export inspections. USDA says 62.527 million bu. passed inspections, up 2 million bu. from the previous week and well above expectations.
  • Futures are also benefiting from weakness in the U.S. dollar index and a "risk on" appetite by traders to start the week.
  • This helped to lift futures from earlier weakness caused by news a case of H7N9 bird flu was confirmed by Chinese health officials in the province of Guangdong. Traders are concerned this could slow feed demand if it is not an isolated incident.
  • NOPA members reports November soybean crushing totaled 160.145 million bu., down slightly from expectations of 161.3 million bu. but the largest crush since January 2010.
  • Gulf soybean basis is a penny higher for immediate delivery, which signals more export sales in the works.

Wheat futures continue to trade under pressure this morning, with SRW wheat down 5 to 6 cents, HRW wheat 4 to 6 cents lower and HRS wheat 2 to 5 cents lower.

  • The slump by wheat futures to new contracts lows has increased pressure on wheat futures, as heavy technical damage has been done on wheat charts.
  • Traders remain concerned global wheat supplies are building while U.S. wheat remains uncompetitive on the global market.
  • News Russia raised its grain production forecast for 2013-14 by 5 MMT to 95 MMT adds to the negative tone. Of that figure, wheat is expected to total 55 MMT.
  • Also, Coceral, a EU grain lobby, today raised its 2013 soft wheat production forecast for the European Union by 600,000 MT to 135.9 MMT.
  • Today's weekly export inspections report came in at 2 million bu. below the previous week at 17.589 million bu., which met very modest expectations.
  • Gulf SRW wheat basis is steady in late-morning trading.

Live cattle futures have trimmed early losses and are slightly to moderately higher. Feeder cattle futures are fractionally weaker.

  • Early losses in live cattle futures were trimmed following positive news from the wholesale market.
  • USDA reports Choice beef is up $1.23 and Select beef is $1.10 higher with movement a positive 96 loads. That strength is lifting futures this morning.
  • Futures started the day on the defensive as traders worked to bring nearby contracts in line with last week's cash cattle prices of mostly $131, which was down $1 from the week prior.
  • Futures are also gaining support from a weaker U.S. dollar index and gains in the stock market.
  • Pressure on feeder futures is being limited by weakness in the corn market.

Lean hog futures are favoring a weaker tone in mixed trade.

  • Most contracts are on the defensive as the new front-month February contract holds a $5-plus premium to the cash hog index. That opens the door for significant downside risk as traders expect cash prices to weaken in the near term..
  • Building hog supplies means the cash hog market is likely to continue lower over the near-term. Cash hog bids are mostly steady to lower today, though tighter supplies in the eastern Corn Belt have led to scattered higher bids in that region.
  • The market is getting support from the wholesale market, however. USDA says the pork cutout value surged $3.39 today and movement is a strong 213.8 loads.
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