Market Snapshot, Noon CT (VIP) -- December 12, 2013

December 12, 2013 06:13 AM
 

Corn futures are 2 to 7 cents lower on most 2014 contracts.

  • Corn futures are posting losses due to strength in the U.S. dollar index and technical-related selling. The move under this week's low attracted followthrough selling as sell stops were struck.
  • Corn futures are also lower on spillover pressure from both wheat and soybean futures.
  • Traders are shrugging off positive export news released by USDA this morning.
  • Corn export sales of 695,400 MT for 2013-14 and 109,400 MT for 2014-15 the week ended Dec. 5 came in slightly above expectations.
  • USDA also announced an 120,000-MT corn sale to unknown destinations for 2013-14 delivery this morning.
  • News a group of lawmakers introduced a bill to eliminate the corn ethanol mandate added to the negative tone.
  • Gulf basis is unchanged in late-morning trading after moving slightly higher in early trading.

 

Soybean futures continue to trade sharply lower, posting losses of 10 to 20 cents. The January contract is leading the decline.

  • The stronger U.S. dollar and a sharp decline in soybean meal and soybean oil exports has soybean futures under pressure.
  • The selloff comes despite news of strong weekly sales for soybeans, suggesting soybean bulls view strong export sales as "old news" and therefore are booking profits.
  • USDA reports weekly export sales reached an impressive 1.109 MMT for 2013-14 and 413,900 MT for 2014-15.
  • Selling pressure appeared as futures penetrated this week's low, setting up a test of psychological support at $13.00.
  • Gulf basis is steady at midday.

 

SRW wheat is 2 to 5 cents lower this morning; HRW wheat is generally 5 to 9 cents lower with the exception of the December contract, which is 20 cents lower. The HRS market continues to post losses around 2 to 3 cents.

  • The stronger U.S. dollar index and the selloff in corn and soybean futures are pressing wheat futures lower. A number of contracts have posted new contract lows.
  • The bearish attitude persists as U.S. wheat is viewed as the last supplier on the world wheat market while total global stocks continue to climb.
  • This morning's weekly export sales showed sales of 372,200 MT for 2013-14, which met expectations. But those expectations were very low.
  • Japan did buy 78,912 MT of U.S. wheat in its weekly tender, but traders continue to wonder how low prices must decline to attract buying interest, especially in the face of a stronger dollar today.
  • Concerns of winterkill have eased as warmer temperatures have moved in into the Plains.
  • Gulf SRW wheat basis is unchanged in late-morning trading with the exception of a 3-cent gain for March deliveries.

 

Live cattle futures are slightly higher in most contracts. Feeder cattle futures have improved to post moderate to sharp gains.

  • Live cattle futures have strengthened today as traders look for steady cash prices once cash trade starts.
  • Texas sources indicate initial bids are coming in at $129, which compares to last week's trade at $132. But feedlots are asking $133 to $134. Expectations are for sales to take place at steady prices this week.
  • Showlist estimates are up at most locations this week.
  • Traders are shrugging off a negative wholesale trade report today. Choice boxed beef values are down $2.11 but Select is 57 cents firmer and movement is solid at 108 loads.
  • Warmer temps are moving into the Plains, easing concerns about livestock stress. However, cold temps the first half of the week likely slowed animal weight gain.
  • Firmer live cattle futures and the downturn in corn futures has strengthened feeder cattle.

 

Lean hog futures are posting slight to moderate gains at midday.

  • Light short-covering continues this morning along with support from the downturn in grain futures.
  • Yesterday's surge in pork movement on a decline in the pork cutout value also encouraged traders to lighten positions. However, the pork cutout value fell another 87 cents this morning, though movement was decent at 177.39 loads.
  • Hog supplies continue to build, keeping pressure on the cash prices. But packers have wide profit margins, giving them incentive to keep kill lines full. This is keeping cash prices steady.
  • The cash hog index is trading in line with the December contract, limiting both buying and selling interest ahead of its expiration tomorrow. But the February contract still holds a sizable premium to the index, which could be a negative once the December contract expires.
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