Market Snapshot, Noon CT (VIP) -- December 13, 2012

December 13, 2012 06:01 AM
 

Corn futures have softened to trade roughly 3 to 6 cents lower in most contracts.

  • Reminders of dismal export demand continue to weigh on the corn market. Plus soybeans have softened, eliminating the spillover support that had helped corn trade mixed earlier today.
  • USDA's weekly export sales of 258,900 MT for 2012-13 and 13,700 MT for 2013-14 met expectations, but expectations themselves were low.
  • This resulted in the pace of corn exports falling even farther behind the pace needed to meet USDA's current export projection.
  • Adding to bearish sentiment, Gulf basis levels fell 4 to 6 cents for winter delivery this morning, though levels were steady at midday.
  • Also, Strategie Grains' projection that the European Union 2013-14 crop will rise 16% over last year adds to ideas the next crop will help make up for this year's shortfall.

 

Soybean futures have softened to trade just slightly higher through the March contract and fractionally to double-digit lower in deferred months.

  • Soybeans initially benefited from an impressive weekly export sales tally this morning in excess of 1.3 MMT, but that support has faded as strong soy demand is considered factored into prices.
  • It appears that to spark the next wave higher for soybeans, support must come from the supply side. Recent rain in Southern Brazil with more in the five-day forecast and a favorably drier forecast for Argentina do not fit the bill.
  • Dollar strength on a rebound in retail sales for November and a drop in new jobless claims to a four-year low is also encouraging profit-taking.
  • Holiday doldrums and fiscal cliff uncertainty are making traders more willing to book profits than to add risk ahead of 2013.

 

Wheat futures remain under pressure with Chicago wheat mostly 7 cents lower, Kansas City 4 to 6 cents lower and Minneapolis seeing lighter losses.

  • Wheat futures continue to see technical selling after this week's significant downside breakout of a multi-month trading range.
  • But pressure is being limited today by improved weekly export sales tallies of 518,600 MT for 2012-13 and 54,900 MT for 2013-14. The total topped expectations.
  • But the fact that USDA raised its wheat carryover projection for 2012-13 due to disappointing exports is limiting what may have otherwise been bullish news.
  • The fact that drought retreated slightly last week is also limiting gains, though much more precip is needed to make even a dent in the widespread and extreme drought in winter wheat country.

 

Live cattle futures have pared gains to trade steady to slightly higher in most contracts. Feeder cattle futures are now moderately to sharply higher.

  • Gains in live cattle futures signal traders expect cash cattle trade to eventually take place above last week's $124 on the Southern Plains and $123 to $124 in northern locations.
  • Supporting this expectation is tighter showlist estimates and strong boxed beef movement this week.
  • But the fact that boxed beef prices were mixed yesterday and this morning -- with Choice cuts down 23 cents and Select cuts up 25 cents -- adds some uncertainty. Plus, packers continue to deal with negative profit margins.
  • Feeder cattle futures are benefiting from ongoing weakness in the corn market.
  • Outside markets are also curbing bullish enthusiasm, as the dollar is firmer and the stock market is under pressure.

 

Lean hog futures are split amid bull spreading with nearbys slightly firmer and deferred months slightly lower.

  • Nearby lean hogs are benefiting from mostly steady cash hog bids today, which signals recently improved packer profit margins have boosted their near-term demand.
  • While the pork cutout has declined over the past week, movement has remained solid.
  • This reminds traders of strong pork demand at home and overseas. USDA data this week showed that USDA pork exports were record high for value and volume in October.
  • The December contract is also benefiting from the $1-plus discount it holds to the cash hog index with just 24 hours remaining until it expires.
  • Negative outside markets are encouraging light profit-taking in deferred contracts.
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