Market Snapshot, Noon CT (VIP) -- December 26, 2012

December 26, 2012 06:03 AM
 

Corn futures have softened to trade mostly 7 to 10 cents lower on spillover from soybeans.

  • As soybean futures softened, corn followed. Trading volume is thin, as it typically the case during the holidays. A lack of fresh news is also making it difficult for corn to rally.
  • This morning's weekly export inspections report failed to provide much interest for bulls as it showed corn inspections within expectations at 13.475 million bushels.
  • Gulf basis at midday is steady to 1 cent firmer for February delivery, which signals tight supplies.
  • A weaker U.S. dollar index is positive, but this is being overshadowed by fiscal cliff unease that is leading to a "risk-off" attitude toward the grain markets.
  • December 2013 corn futures have slipped below the psychological $6.00 level to violate support at the November low. Closing below this level would open additional near-term downside risk.

 

Soybean futures have extended early losses to trade 11 to 19 cents lower.

  • Soybean futures are ignoring a weaker dollar, as traders are opting to take some profits out of the market following Monday's gains. Early profit-taking triggered sell stops.
  • Traders also remain unwilling to add risk with the fiscal cliff looming at year-end.
  • Traders are generally ignoring this morning's fresh export news. USDA announced two daily sales this morning -- a 115,000 MT bean sale to China for 2012-13 and a 108,000 MT sale to an unknown destination for 2012-13.
  • The market is also ignoring stronger-than-expected weekly export inspections of 44.486 million bu. as traders expect China to soon switch its attention to securing Brazilian supplies.
  • Favorable growing conditions in Brazil are also behind profit-taking today, as there are more rain chances in the five-day forecast.

 

Wheat futures continue to post losses in the mid to upper teens in Chicago and Kansas City, with Minneapolis seeing slightly lighter losses.

  • As corn and soybean futures extended losses, wheat followed suit.
  • Additional pressure is coming from news Egypt has raised its export cap to 2.5 MMT from 2 MMT.
  • Traders are ignoring weakness in the U.S. dollar index as well as the risk of freeze damage to a poorly established winter wheat crop as they focus on concerns about the pending fiscal cliff.
  • Weekly wheat inspections of 15.128 million bu. came within traders' expectations.
  • March Chicago wheat has moved to its lowest level since late June and is now pivoting around $7.77.

 

Live cattle futures are slightly higher in all but the far-deferred contracts that are mixed. Feeder cattle futures are enjoying stronger gains.

  • Live cattle are being supported by expectations of higher cash market prices in early January, as supplies of fed cattle will tighten.
  • Because of the tightening supply situation and the uncertainty winter weather brings, traders are comfortable with nearbys trading at a $3-plus premium to the cash market.
  • But uncertainty surrounding the outcome of the U.S. fiscal cliff is limiting both buying and selling interest.
  • The U.S. dollar index has moved off its daily low and the Dow Jones Industrial Average is weaker, which is also capping buying interest in cattle futures.
  • Feeder cattle futures are benefiting from weakness in the corn market this morning.

 

Lean hog futures have weakened to mixed trade, with nearbys remaining on the plus side of unchanged.

  • Nearby futures are being supported by the winter storm that is disrupting hog trade in the eastern Corn Belt. But futures have softened due to a lack of fresh news.
  • The cash hog market is mostly steady this morning, with packers thought to be generally well supplied for back-to-back holiday-shortened weeks.
  • Nearbys have also softened as February hogs hold around a $4 premium to the cash index.
  • Traders also remain concerned about the outcome of the fiscal cliff.
  • Price action could remain choppy as traders position ahead of Friday's Hogs & Pigs Report, which is expected to show All Hogs & Pigs as of Dec. 1 at 99.1% of year-ago levels.
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