Market Snapshot, Noon CT (VIP) -- December 2, 2013

December 2, 2013 06:12 AM
 

Corn futures are 2 to 3 cents lower in most contracts.

  • Spillover pressure from soybean futures coupled with strength in the U.S. dollar index are pressuring the corn market.
  • News China rejected another cargo of U.S. corn due to detection of an unapproved GMO product Friday offered additional downside pressure in early trading. The cargoes have reportedly been resold to another Asian destination.
  • Offering some support is the better-than-expected grain inspections report released by USDA this morning. It showed a total of 35.661 million bu. passing inspections, up 5.4 million bu. from the previous week and above trader expectations.
  • The charts remain heavily negative with corn futures are testing the 2013 lows. The Relative Strength Index momentum indicator indicates the market is heavily oversold and vulnerable to a correction.
  • Interior basis levels are mixed as grain merchandisers shift their pricing to March futures.
  • Gulf corn basis is listed as steady in late-morning trading.

 

Soybean futures are 5 to 12 cents lower through the August contract following a firmer tone through the overnight hours.

  • News Brazil and Argentina will receive beneficial rains which will improve soil moisture conditions triggered a move to the downside this morning wiping out gains posted in early trading.
  • Adding to today's negative tone is the disappointing export inspections report, which came in at 52.623 million bu., down 14.743 million bu. from the previous week and under trader expectations.
  • This morning's Relative Strength Index momentum indicator also suggested futures were heavily overbought, prompting profit-taking by fund traders.
  • Strength in the U.S. dollar index is adding to the negative tone as well.
  • Brazil's AgRural raised its domestic soybean production estimate by 700,000 MT to 89.4 MMT, citing recent beneficial rains and control of the helicoverpa armigera caterpillar invasion.
  • Interior soybean basis is reported as steady as farmer selling has declined after a brief surge last week.
  • Gulf basis levels are listed as steady in late-morning trading.

 

Wheat futures continue to 4 to 5 cents lower in the SRW market, 1 to 6 cents lower in HRW wheat and 2 to 4 cents lower in HRS wheat.

  • Pressure on soybean and corn futures coupled with the stronger U.S. dollar are pressing wheat futures lower.
  • Today's export inspections report is viewed as neutral for wheat. USDA reports 15.5 million bu. passed inspections for the week ending Nov. 28. That is up nearly 3 million bu. from the previous week and within trader expectations.
  • Traders remain concerned about the competitiveness of U.S. wheat on the global export market and reports of moisture in South America raises ideas of additional production from those nations.
  • Also reminding of export competition, the European Commission raised its 2013 common wheat harvest estimate from 133.5 MMT in October to 134.2 MMT. This would be the largest crop for the bloc since 2008.
  • Gulf SRW wheat basis is steady in late-morning trading.

 

Live cattle futures are slightly lower with feeder cattle futures slightly higher.

  • Trade activity is light with some traders evening positions waiting for indications of how cash cattle will trade this week.
  • Futures are gaining some support for the $1 higher prices cash cattle trade last week which saw $132 being paid in the Southern Plains. But December futures are already at more than a $1 premium to that price, which limits buying interest.
  • In addition, trade was very light in Texas last week, which could lead to heavier showlists this week.
  • The wholesale beef market is mixed with Choice down 12 cents but Select up 52 cents this morning. Movement is a disappointing 28 loads.
  • Lower corn prices are supporting feeder cattle futures.

 

Lean hog futures are slightly higher in late-morning trade.

  • Lean hog futures have moved to positive side of the ledger but futures continue to trade within the narrow range that has bound action since mid-November.
  • The pork cutout value is contributing to the slight gains with pork cutout $1.92 higher but movement is light at 127.99 loads.
  • Cash hog bids are mostly steady as packers are in need of supplies coming out of the Thanksgiving holiday.
  • Dollar strength and the $4.50 premium the December contract holds to the cash hog index is limiting buying interest.
     
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