Market Snapshot, Noon CT (VIP) -- December 28, 2012

December 28, 2012 06:01 AM
 

Corn futures continue to chop in a narrowly mixed range.

  • Choppy trade that has dominated action this week amid fiscal cliff uncertainty continues in the corn market today. The dollar has moved well off its early highs, which has encouraged light short-covering at times this morning.
  • But that is the extent of buying interest as today's weekly export sales report reminded the market of lackluster export demand. Sales of 104,300 MT for 2012-13 fell short of already low expectations. Corn exports are lagging last year's pace by 48%.
  • Delivery of forward contract corn sales in December have made more supplies available and have caused basis levels at interior locations to soften. Gulf basis was steady this morning and at midday.

 

Soybean futures have softened slightly to trade mostly 1 to 2 cents higher.

  • Early gains in the soybean market have encouraged light short-covering. Traders have been unwilling to actively add long or short positions with fiscal cliff uncertainty hanging over the market.
  • USDA's announcement that China bought 165,000 MT of soybeans and unknown destinations bought 30,000 MT of soyoil -- both for 2012-13 -- is giving bulls a slight advantage.
  • But disappointing weekly export sales of just 87,000 MT for 2012-13 are limiting gains. This tally included some, but not all, of China's recent soybean order cancellations.

 

At midday, Chicago wheat is favoring the upside in choppy trade, while Kansas city and Minneapolis wheat are choppy with a downside bias.

  • Wheat futures have struggled to find buying interest today despite an impressive weekly export sales tally of 1.009 MMT, which signals U.S. prices are once again competitive on the global market.
  • Strength in the U.S. dollar index and corn's inability to find sustained buying interest has made it difficult for wheat to rally.
  • Also, traders want to see proof today's export sales tally was more than a "fluke."
  • Precip in some areas of the Southern Plains today is adding light pressure.

 

Live cattle futures are posting slight gains across the board. Feeder cattle are slightly to moderately higher.

  • Light cash cattle trade is picking up in Texas at $127, which is up a buck from the week prior. This follows light trade in Nebraska at that level yesterday.
  • But support from the firmer cash prices is limited as the December contract that expires Monday is already at a $2-plus premium to those levels and the soon-to-be February contract is $6 above the cash market.
  • Also limiting buying interest, boxed beef values were mixed this morning with Choice cuts down 83 cents and Select cuts up 81 cents. Movement was solid at 112 loads.
  • The market also remains hesitant to add risk considering ongoing fiscal cliff uncertainty, which is supporting the U.S. dollar index today.

 

Lean hog futures are posting slight to moderate losses at midday.

 

  • Traders in the lean hog market are reducing their risk exposure ahead this afternoon's Quarterly Hogs & Pigs Report and fiscal cliff talks this weekend that will be highly influential as to U.S. economic health.
  • The H&P Report is expected to be mildly friendly, with All Hogs & Pigs at 99.1% of year-ago, Kept for Breeding at 99.3% and Kept for Marketing at 99.1% of year-ago levels.
  • Light pressure also stems from a $1.14 slip in pork cutout values yesterday to push packers' profit margins back into the red.
  • But tightening supplies are keeping the cash hog market mostly steady today with a few firmer bids amid variable demand.

 

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