Market Snapshot, Noon CT (VIP) -- December 10, 2012

December 10, 2012 06:01 AM
 

Corn futures have pared gains slightly and are trading around 5 to 6 cents lower.

  • Traders remain unwilling to add risk ahead of tomorrow morning's Supply & Demand Report. Expectations are for USDA to raise its 2012-13 carryover estimate by 19 million bu. to 666 million bu., which is down sharply from last year's 988 million bushels.
  • But a wide pre-report trade guess range indicates uncertainty about the figure, adding to the risk-averse attitude.
  • Also, this morning's disappointing weekly export inspections tally of 7.861 million bu. reminds the market of demand destruction.
  • Softer Gulf basis levels for near-term delivery this morning and steady levels at midday signal a needed boost in demand remains absent.

 

Soybean futures have improved to narrowly mixed trade with most contracts favoring the downside.

  • Traders continue to even positions ahead of USDA's Supply & Demand Report Tuesday morning. Expectations for USDA to trim its new-crop carryover peg by 5 million bu. have encouraged light short-covering at times this morning.
  • Also limiting selling interest are steady to firmer Gulf basis levels for near-term delivery today, which signal more export demand news may be ahead.
  • Weekly soybean export inspections were solid and within expectations this morning at 46.632 million bushels. Inspections for 2012-13 are running 41.1% of year-ago; USDA's most recent export forecast is for soybean exports to lag year-ago by 1.2%.
  • Also, China's November soybean imports were up 3.2% and 11.4% over month- and year-ago, respectively, despite a narrowing of the country's total trade surplus. This signals ongoing soybean demand strength among importers.
  • But a forecast that favors record-large production for Brazil is keeping futures in negative territory. The region has recently benefited from rain and more is in the forecast.

 

Chicago wheat remain the downside leader in the wheat complex with double-digit losses; Kansas City and Minneapolis are seeing slightly lighter losses.

  • Spillover from corn continues to keep wheat in negative territory. Traders also remain hesitant to add risk ahead of tomorrow morning's USDA Supply and Demand Report.
  • Pre-report expectations are for USDA to raise its 2012-13 carryover estimate by 14 million bu. from November to 718 million bushels.
  • Pressure also stems from much-needed rain chances for the Southern Plains late this week.
  • Weekly wheat export inspections of 13.938 million bu. met expectations, but the tally was nothing spectacular.
  • Support from news Egypt purchased 115,000 MT to wheat for 2012-13 is limited as this transaction was known last week.
  • News Argentina will reduce 2012-13 wheat exports by 1.5 MMT to 4.5 MMT in 2012-13 due to declining crop estimates is being ignored.

 

Live cattle futures are favoring the downside in narrowly mixed trade. Feeder cattle futures are slightly to moderately higher.

  • Live cattle futures remain at a premium to last week's $124 cash cattle trade, which is limiting buying interest in nearby contracts.
  • In addition, traders are worried about beef export demand due to the Russia ractopamine-related trade restriction possibility and domestic demand due to fiscal cliff uncertainty.
  • Plus, packers continue to cut deep in the red and demand is limited with holiday buying largely complete; consequently, some packers have trimmed slaughter schedules.
  • But improvement in the boxed beef market this morning has encouraged tentative short-covering. Choice cuts firmed 96 cents while Select cuts are steady. Movement was decent at 96 loads.
  • Feeder cattle futures are benefiting from weakness in the corn market.

 

Lean hog futures have softened to narrowly mixed trade.

  • Nearby lean hog futures are benefiting from the discount they hold to the cash hog index with just days until the December contract's expiry.
  • Cash hog bids are steady to lower today as holiday buying has tapered and packer profit margins have slipped to near breakeven. Plus, supplies are easy to come by.
  • But fiscal cliff uncertainty and the possibility Russia's trade dispute with the U.S. will lead to a halt of pork exports is limiting buying interest.
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