Market Snapshot, Noon CT (VIP) -- December 26, 2013

December 26, 2013 05:59 AM
 

Corn futures have extended early losses to trade 4 to 6 cents lower with nearby contracts leading to the downside.

  • News China rejected a 2,000 MT shipment of U.S. dried distillers grains (DDGs) continues to weigh on the market, despite the fact that this was expected.
  • More DDG shipment rejections are likely as Chinese quarantine authorities have increased inspections of these shipments.
  • The market is also seeing some profit-taking after four consecutive trading days of gains.
  • Spillover pressure from soybeans and wheat add to the negative tone.
  • Traders are largely brushing off news that lower corn prices have helped lift Japan's use of corn in animal feed in October as rebuilding demand is known.
  • Basis at interior locations is holding steady as farmer selling is light during the holiday season.

 

Soybean futures continue to soften. Most contracts are now double-digit lower with January through July beans 13 to 17 cents lower.

  • Rain in the forecast for Argentina has eased dryness concerns for the time being, despite the forecast for heat to continue. Nearby contracts appear headed for a test of key levels of support as thin trading volume makes it easier for bears to push the market lower.
  • Also, the 6- to 10-day outlook is cooler and wetter for key growing areas of Argentina.
  • This is again shifting attention to ideas China will cancel U.S. soybean orders as a record-large South American crop appears likely.
  • Also, there were no daily soybean export sales announcements. Multiple sales were announced to start the week.
  • Traders will likely remain reluctant to actively add long or short positions ahead of year-end as trading volume over the holidays is thin, making the market more prone to volatile price swings.

 

SRW wheat futures have pared losses to trade around a penny lower, while HRW wheat is down 2 to 5 cents and HRS wheat is mostly 2 cents lower.

  • Losses in the corn market and the downtrending posture of the wheat market are keeping wheat futures under pressure.
  • Traders are not yet optimistic that U.S. wheat prices have dipped far enough to attract strong export business.
  • Tomorrow's export sales report will provide insight as to demand. Pre-report expectations are for wheat sales to come in between 350,000 MT and 550,000 MT.
  • Concern about another arctic blast early next week is limited. But above-normal temps currently in effect for some parts of winter wheat country are eroding protective snowcover.

 

Live cattle futures continue to see slight gains, while feeder cattle futures are slightly to moderately higher.

  • Some traders in the live cattle market pared gains on news of disappointing boxed beef action coming off the Christmas holiday. Choice boxed beef firmed 42 cents this morning while Select dipped $1.10. Of note, movement fell to a very light 46 loads.
  • This has caused some to rein in bullish cash cattle trade hopes. Trade may not take place until Friday.
  • Tight showlists and the forecast for more stressful weather next week could help to ward off lower trade. However, light demand over the holiday and negative packer profit margins adds some uncertainty.
  • Light support also stems from news a Cargill beef processing plant in Dodge City, Kansas, will reportedly re-open today after a fire Monday evening.
  • Feeder cattle futures are benefiting from weakness in both the corn market and the dollar.

 

Lean hog futures continue to post slight losses at midday.

  • Traders are reducing risk ahead of Friday's Quarterly Hogs & Pigs Report, which is expected to show all hogs and pigs on Dec. 1 just shy of year-ago levels. The report is also expected to reflect mild herd expansion plans amid cheaper feed costs.
  • The cash hog market is mixed today as some packers are in need of supplies yet this week and the next while others are having no trouble booking needs.
  • Pressure on nearby contracts also stems from the steep discount they hold to the cash hog index, which is now projected below $80.
  • Pressure also stems from a pullback in the product market this morning after a strong performance Tuesday. The pork cutout value fell $1.60 and just 122.86 loads changed hands this morning.
     
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