Market Snapshot, Noon CT (VIP) -- December 27, 2013

December 27, 2013 06:06 AM
 

March through December 2014 corn futures are steady to fractionally higher with far-deferred months mixed.

  • Nearby corn futures continue to benefit from end-of-week and end-of-year positioning.
  • This morning's Weekly Export Sales Report is also supportive as sales of nearly 1.479 MMT for 2013-14 and 509,200 MT for 2014-15 shattered expectations.
  • But signs that demand has been rebuilt have spurred limited reaction from traders in recent weeks, and the same holds true today.
  • Buying interest remains tempered by recent Chinese rejections of U.S. corn and dried distillers grains (DDGs) due to the presence of unapproved GMO material and expectations for more such cancellations ahead.
  • Weekly ethanol production fell 2,000 barrels per day from last week's strong tally to 926,000 bpd. Ethanol stocks rose 35,000 barrels to 15.66 million barrels.

 

Soybean futures are are up 2 to 4 cents through the July contract with far-deferred months narrowly mixed.

  • Weakness in the U.S. dollar index continues to encourage light short-covering amid ideas the downside was overdone yesterday.
  • Support also stems from weekly soybean export sales that topped expectations at 720,200 MT for 2013-14 and 68,100 MT for 2014-15. Soyoil sales also came in well above expectations at 83,900 MT.
  • Light support also stems from news China will end its government stockpiling program for soybeans, meaning it will now rely on imports to refill state reserves.
  • South American weather remains a mixed bag. Hot temperatures are expected to continue to stress the crop into next week, but the extended outlook calls for cooler temps and rain.

 

Wheat futures are choppy to lower with SRW contracts narrowly mixed and HRW and HRS wheat 2 to 4 cents lower.

  • The downtrend of the wheat market is weighing on futures at year-end, as it makes few traders willing to add long positions.
  • Also, the latest Drought Monitor update reflected improvement in the drought profile of winter wheat country over the past week, bolstering ideas about the favorable condition of the crop.
  • Weekly wheat export sales of 596,900 MT for 2013-14 and 60,000 MT for 2014-15 topped pre-report expectations and represent solid demand. But traders are more focused on export competition from an ample global wheat crop.
  • Meanwhile, above-normal temperatures in the Plains have eroded protective snowcover. This is concerning since another blast of arctic air is expected by Sunday.
  • Selling interest is being tempered by a weaker U.S. dollar index.

 

Live cattle futures have extended early gains to trade moderately to sharply higher through the June contract, with far-deferred months steady to slightly higher. Feeder cattle are also enjoying moderate gains.

  • Gains in futures and tight showlists helped feedlots get $2 to $4 higher prices for cash cattle. Trade is got started at $132 to $133 in Kansas and at $133 to $134 in Texas. In Nebraska, packers are reportedly paying $212 for dressed cattle, which would be a $4 to $5 jump from the week prior.
  • The front-month contract is now trading in line with the upper end of today's cash trade.
  • The product market also improved this morning, which Choice cuts up 15 cents and Select up 52 cents. Movement also improved to 77 loads, but still light.
  • The market is also benefiting from strong 2014 beef export sales of 20,400 MT the week ended Dec. 19, which was partially offset by a net sales reduction of 7,200 MT for 2013.
  • Losses in the U.S. dollar index, spillover from live cattle and recognition of tight supplies are lifting feeder cattle futures.

 

Lean hog futures remain steady to slightly higher ahead of midday amid thin trade.

  • Traders remain focused on mildly covering short position ahead of this afternoon's Quarterly Hogs & Pigs Report. Pre-report expectations are for All Hogs & Pigs to come in at 99.9%, Kept for Breeding at 101.0% and Kept for Marketing at 99.8% of year-ago levels.
  • There is increased uncertainty regarding this report as it is expected to reflect the impact of the porcine epidemic diarrhea virus (PEDV).
  • The cash hog index ticked higher for the first time in an extended period today, fueling ideas that the market may be nearing a seasonal low.
  • However, the product market has yet to give any such indication. The pork cutout value slid another $1.76 this morning, though movement improved to 193.54 loads.
  • Cash hog bids are mostly steady today as some packers are still in need of supplies and they are still enjoying wide profit margins.
     
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