Market Snapshot, Noon CT (VIP) -- December 11,2012

December 11, 2012 06:04 AM
 

Corn futures softened ahead of midday to trade mostly 5 to 10 cents lower.

  • USDA's Supply and Demand Report this morning did not contain any major surprises. USDA left domestic carryover unchanged from last month and trimmed its global carryover projection slightly.
  • Spillover from wheat and soybean futures is pressuring corn, as is recognition of lackluster export demand for U.S. corn.
  • USDA's 8-MMT increase in its 2012-13 Chinese crop estimate of 208 MMT would be a record for the country and is in line with Chinese government estimates. This is also weighing on corn as it points to limited export demand from China for U.S. corn.
  • But the fact that USDA trimmed its Argentine corn crop estimate keeps South American weather concerns in mind.
  • Friendly outside markets are also helping to limit pressure.

 

Soybean futures have softened to post losses between 7 and 13 cents.

  • USDA's carryover adjustments today were not surprising. It cut U.S. carryover a bit more than expected due to a projected increase in crush.
  • The lack of surprise has encouraged some traders to book profits after recent strong gains.
  • News China bought 115,000 MT of soybeans for the 2012-13 season is limiting selling interest. But the market has become used to solid soybean export demand. An especially impressive sales tally is now needed to excite market bulls into adding long positions.
  • Improved weather in Brazil is also adding light pressure.

 

Wheat futures have extended losses. Chicago wheat is posting losses in the 20s to 30s; Kansas City is 20-plus cents lower and Minneapolis is posting losses in the teens.

  • USDA raised U.S. wheat carryover 36 million bu. more than traders had anticipated thanks to a decrease in exports.
  • This adds to concerns about U.S. exporters' inability to capitalize on tightening Black Sea region supplies.
  • Plus, USDA raised its production estimates for Australia, China and Canada today, which led to a 2.77-MMT increase in its global carryover projection.
  • Beneficial rains in the forecast for the U.S. Southern Plains adds profit-taking incentive.

 

Live and feeder cattle futures have rallied to trade moderately to sharply higher.

  • A $2.27 surge in Choice boxed beef cuts along with a $1.51 increase in Select values this morning raise expectations for higher cash cattle trade this week. The higher prices did limit beef movement to 88 loads, however.
  • Plus, showlist estimates are tighter at most locations this week.
  • Support also comes from the fact that 2013 production is well below that of 2012, reminding traders the 10-year cycle high in cattle prices will likely come in 2013.
  • USDA raised its average annual steer price for 2012 by 38 cents from November to $122.85 and its 2013 projection by $1 on either end of the range to $124 to $134.
  • Spillover from live cattle and softer corn prices are supporting feeder cattle futures.
  • Outside markets are also supportive of commodity buying today.

 

Lean hog futures remain narrowly mixed with nearby contracts favoring the downside and deferred months the upside.

  • Nearby lean hog futures are being pressured by steady to lower cash hog bids today as holiday buying interest has faded.
  • But recent gains in the pork market coupled with softer cash hog bids have improved packer profit margins. Impressive morning pork movement of 44.5 loads signals better margins may have encouraged a pickup in demand.
  • Pressure on nearby contracts is also being limited by the nearly $4 discount the December contract holds to the cash hog index and the $2-plus discount the March contract holds to the index.
  • Support for deferred contracts comes from news USDA trimmed its 2012 and 2013 pork production projections and raised its average hog price forecasts for both years.
     
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