Market Snapshot, Noon CT (VIP) -- December 14, 2012

December 14, 2012 06:06 AM
 

Corn futures have slightly extended gains to trade 1 to 7 cents higher with nearbys as the upside leader.

  • Corn is benefiting from weakness in the U.S. dollar index and spillover from soybeans.
  • News China rejected two corn shipments from Argentina raise hopes the U.S. will still be able to attract some corn export business.
  • Plus, a Sinograin official has said that China's 2012 corn crop is 10.24 MMT smaller than indicated by China's statistics bureau.
  • Countering this however, are expectations South Korea will source its 324,500 MT optional origin corn purchase from South America.
  • Also signaling lackluster export demand, Gulf basis levels continue to soften.
  • Light pressure stems from news International Grains Council projects global corn output will rise by 10.3% to 916 MMT next year.

 

Soybean futures continue to enjoy gains of mostly 6 to 18 cents, with nearbys leading to the upside.

  • Late-week reminders of impressive soy demand are providing soybeans a boost to wrap up the week.
  • Today's NOPA soybean crush for November totaled 157.308 million bu., which met expectations and represents an 11.3% increase over year-ago. Soyoil stocks of 2.385 billion lbs. topped expectations.
  • Plus, weekly export sales tallies the past two weeks have topped 1 MMT.
  • In addition, Gulf basis firmed 2 cents for immediate delivery this morning and was steady at midday, signaling more demand news may lie ahead.
  • But the fact that South American production is expected to be record large limits beans' upside potential.
  • Dollar weakness on improvement in China's manufacturing sector is also supportive.

 

Wheat futures have firmed to trade mostly 6 to 8 cents higher in Chicago and Minneapolis with Kansas City seeing lighter gains.

  • Dollar weakness and strong gains in the soybean market are encouraging corrective short-covering in the wheat market to wrap up the week.
  • Also encouraging of this end is widespread drought in winter wheat country.
  • But short-covering is the extent of buying interest as disappointment in lackluster U.S. wheat exports have resulted in major technical chart damage this week that will take signs of an export demand recovery to repair -- something that has thus far proved illusive.
  • News the International Grains Council expects global wheat production to rise 5.4% to 690 MMT in 2013-14 is also limiting buying interest.

 

Live cattle futures have improved to post moderate gains in most contracts. Feeder cattle futures have reversed early losses to post slight gains.

  • A softer U.S. dollar index has encouraged short-covering in the live cattle market ahead of the weekend and the start of active cash cattle trade.
  • Light to moderate cash cattle trade took place in Texas yesterday at slightly higher prices of $124.50, but trade has yet to pick up elsewhere.
  • The fact that traders continue to build the premium futures hold to last week's cash prices signal they anticipate trade to take place at higher prices when it does get underway, given tighter showlist estimates and much-improved packer profit margins.
  • Countering this assumption is softer boxed beef prices to wrap up the week. This morning, Choice cuts fell 24 cents and Select cuts fell 49 cents. Movement was solid at 103 loads, however.
  • Firmer corn prices initially encouraging profit-taking in feeder cattle futures, but a weaker dollar and spillover from live cattle has returned some buying interest to feeders.

 

Lean hog futures have softened to post slight to sharp losses.

  • Traders are booking profits ahead of the weekend as holiday buying is thought to be coming to a close.
  • But mostly steady to firmer cash hog bids today limit downside risk as profitable margins are giving packers incentive to keep kill lines full next week and some are still working to secure supplies.
  • Pork movement is off to another strong start this morning; 32.5 loads have already changed hands.
  • Also, signs of economic improvement in China point to still strong pork export prospects in the year ahead.
  • Support for the December contract has faded as the cash hog index has dropped to close the price gap to just 50 cents.

 

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