Market Snapshot, Noon CT -- (VIP) -- December 19, 2013

December 19, 2013 05:55 AM

Corn futures continue to trade 2 to 3 cents higher following positive export news.

  • Corn futures continue to trade higher on supporting export news on short covering.
  • Tempering gains is the strength in the U.S. dollar index.
  • Traders continue to react positively to today's weekly export corn sales report which shows weekly sales coming in above expectations. The rise in exports hints China will continue to be a buyer of U.S. despite its recent round of rejected corn shipments due to inclusion of a GMO corn variety that has yet to be approved by that government.
  • That report indicated China was a buyer of 124,000 MT, including 180,000 MT switched from unknown destinations, 60,000 MT switched to South Korea and decreases of 4,700 MT. There were 245,500 MT of corn shipped to China the week ended Dec. 12.
  • Adding further support to today's gains is USDA's announcement of a sale of 130,000 MT of corn to South Korea for 2013-14. A daily sale of 127,536 MT of corn was also announced to an unknown destination, with 111,280 MT for 2013-14 and 16,256 MT for 2014-15.
  • Gulf corn basis is down 1 to 2 cents for January and February delivery and steady for other delivery periods.

Soybean futures are fractionally to 5 cents lower after trimming losses on disappointing export news.

  • Soybean futures fell after opening firmer due to disappointing export sales.
  • Today's strength in the U.S. dollar index adds to the negative tone set by today's poor export sales data.
  • USDA says weekly soybean export sales were just 415,500 MT for 2013-14, which are a new marketing-year low. Sales of 80,200 MT were reported for 2014-15. Combined, sales were well below expectations.
  • The weekly report also indicated an unknown destination had canceled 576,300 MT of 2013-14 soybean purchases. Traders believe China is the "unknown destination."
  • News China reported another case of the H7N9 strain of bird flu in the Guangdong province, bringing the total number of cases to four since Sunday, also added to today's negative tone.
  • Gulf soybean basis is steady in late-morning trading with the exception of the February delivery period which is down 5 cents. This suggests the market will not be receiving favorable export news for awhile.

SRW wheat futures are 4 to 5 cents higher; HRW and SRW wheat are 1 to 3 cents firmer due to positive export news.

  • Short-covering on positive export news from USDA and ideas recent losses have been overdone has wheat futures moving higher today.
  • However, sharp strength in the U.S. dollar index is limiting gains.
  • Traders reacted positively to news weekly exports sales tallied 656,100 MT for 2013-14 and 3,000 MT for 2014-15. These figures are well above expectations.
  • The surge in export sales may signal U.S. prices are becoming competitive on the global market after dropping to an 18-month low. But today's dollar strength has traders concerned demand will soften.
  • Traders are also covering shorts after futures plunged to an 18-month low on ideas prices are heavily oversold.
  • Gulf SRW wheat basis is steady for nearby deliver in late-morning trading.

Live cattle futures and feeder cattle futures continue to trade slightly higher.

  • Cattle futures continue to trade slightly higher as traders even positions ahead of USDA's Cattle on Feed Report due out tomorrow.
  • News from the cash and wholesale market continues to be negative. Reports now indicate some Kansas cattle have moved at $130 in light trading, which is down $1 from a week earlier. This follows reports of cash cattle moving a $1 to $2 lower values in the Nebraska market, also in light trading and also down $1 from a week ago.
  • Choice beef is reportedly down 49 cents while Select is listed as 46 cents higher this morning. Movement is a light 87 loads.
  • Traders expect tomorrow's Cattle on Feed Report to show On-Feed at 95.4%, Placements at 100.9% and Marketings at 94.6% of year-ago levels.
  • USDA reported weekly U.S. beef sales totaled just 4,800 MT, mostly to Japan, compared with 10,100 MT in the previous week.
  • Feeder cattle futures are stronger on tight supplies and on technical trading as traders are testing the gap area left on Wednesday.

Lean hog futures have moved to the plus column but are posting only slight gains.

  • Lean hog futures have edged higher as traders even positions ahead of the holiday.
  • Cash hogs are reported as steady to $1 weaker as supplies continue to build. But packer cutting margins remain positive which keeps them working to keep kill lines as full as possible.
  • The wholesale pork trade is negative again today with the cutout valued down $1.00. Movement is a solid 248.15 loads this morning.
  • Traders have only limited interest in buying February futures as they continue to hold a $6 premium to the cash hog index.
  • USDA's weekly export sales report shows U.S. pork sales at 9,700 MT, mostly to Mexico, compared with 5,300 MT in the previous week
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