Market Snapshot, Noon CT (VIP) -- December 31, 2013

December 31, 2013 06:06 AM
 

Corn futures continue to trade 1 to 2 cents lower in thin trade.

  • Trading activity is light ahead of the New Year's Holiday.
  • Reports of showers occurring overnight in Argentina with forecasts calling for more over the next several days are dampening buying interest. Temperatures are expected to remain elevated, however.
  • Gulf basis is unchanged for all delivery periods at midday after softening a penny for January through March delivery this morning.
  • Light pressure also stems from news UkrAgroConsult raised its 2013 corn production forecast for Ukraine by 500,000 MT to 26 MMT.
  • The gains in the U.S. dollar index on a larger-than-expected jump in consumer confidence in December are also limiting buying interest.

 

Soybean futures have softened to trade 9 to 14 cents lower through the August contract, while deferred months are down 5 to 7 cents.

  • Recent waves of precipitation across Argentina are seen as improving crop prospects for that nation and adding to projections of a record-large harvest for South America.
  • However, areas of southern Brazil have remained hot and dry the past several weeks, while northern Brazil has seen heavy rains. However, analysts aren't ready to trim yield projections just yet.
  • Funds liquidation continues to pressure the market.
  • Gulf basis slipped a penny for December and January shipment at midday, while other months held steady.
  • Strong demand for U.S. beans, while not enough to spur active buying interest, has helped to keep a floor under the market this month.

 

Wheat futures are posting slight gains; SRW wheat futures are leading the rise with gains of 2 to 3 cents.

  • Light short-covering continues to dominate trading this morning as funds lighten their heavy short position in the market.
  • The March SRW wheat contract dipped a penny blow support at the $6.00 mark and then firmed as no sell stops were triggered. This has some traders saying that a potential seasonal low could be near.
  • However, buying interest remains limited to short-covering as the technicals are oppressively bearish and U.S. wheat is not competitively priced in the global market.
  • Traders are shrugging off news about dryness on the Southern and Central Plains as the winter wheat crop entered dormancy in good condition. Winterkill concerns are also minimal.
  • Gulf SRW wheat basis is unchanged at midday.

 

Live cattle futures have softened to choppy trade, while feeder cattle have softened to post slight losses in most contracts.

  • Last week's record-setting cash cattle trade continues to underpin this market. Sales in the Southern Plains took place at $132 to $134, while northern locations saw even higher prices up to $136.
  • The market is also seeing some year-end positioning. The cattle market is expected to hit a delayed 10-year cycle high in 2014, limiting selling interest.
  • The wholesale beef market is also providing support. Choice boxed beef rose $1.13 this morning while Select beef increased 60 cents. In addition, morning movement is a strong 100 loads. The midweek holiday may be a factor in that higher movement, however.
  • Feedlots are asking to higher prices due to the strength in beef prices and unfavorable cold and snowy weather across the nation's northern tier. But showlist estimates are up in all locations except Nebraska, where numbers are estimated steady with week-ago. Plus, packers continue to deal with negative margins.
  • Year-end profit taking is weighing on feeder cattle futures.

 

Lean hog futures are continue to trade mixed, with nearby contracts higher and deferred contracts weaker.

  • Lean hog futures continue to see mild short-covering in nearby contracts following yesterday's bearish reversal. The July and later contracts are slightly weaker.
  • Trade volume is very light.
  • Trader attitudes remain bearish as neither the cash nor the wholesale markets have given signs they are working on a seasonal low. That will keep buying interest in futures minimal.
  • The cash hog index has ticked up slightly the past two days, but it remains at a $6-plus discount to nearby futures, which will limit buying interest..
  • The pork cutout value rose $1.09 this morning and movement was impressive at 387.28 loads.
  • Cash hog bids are mixed today thanks to varied demand. But the arctic cold and poor road conditions in the upper Midwest are limiting hog movement.
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