Market Snapshot, Noon CT (VIP) -- December 5, 2012

December 5, 2012 06:02 AM
 

 

Corn futures are holding onto around 1- to 5-cent gains on spillover from soybeans.

  • Without fresh news to digest, upside potential in the corn pit is being limited by spillover from soybeans. Buying throughout the morning has also been limited by strength in the dollar index.
  • However, Gulf corn basis has improved to steady to 1-cent higher for immediate shipment to reflect the tight supply situation.
  • But ongoing weather concerns in Argentina are supportive for prices. Planting delays due to heavy rains put acreage and yield prospects in question.
  • March corn futures have seen little net price movement so far this week. Resistance stands at the 100-day moving average, currently at $7.69 1/4.

Soybean futures are posting double-digit gains in the mid-teens in most contracts, with meal and soyoil seeing spillover support.

  • Soybean futures are being supported by weather concerns in South America and talk that China is back buying beans. After trending firmer this morning, Gulf soybean basis is steady at midday
  • The South American weather situation also remains on traders' minds. While recent rains are benefiting crops in northern and central Brazil, dry conditions in southern Brazil point to reduced yield potential.
  • Also supportive for oilseed markets this morning is Statistic Canada's lower-than-expected canola crop estimate of 13.31 MMT.
  • Fund buying has also been strong this morning. January soybeans are working on an upside day of trade on the daily chart, but still need closes above $15.00 to signal a near-term low has been posted. A high-range close today would complete just a 25% retracement of the decline from the September high.

Chicago and Kansas City wheat are mostly 2 to 3 cents higher, with Minneapolis 2 to 8 cents higher.

  • Wheat is the wheat pit has picked up on spillover from soybeans, although upside potential is being limited by strength in the dollar.
  • Buying is also being curbed by this morning's higher-than-expected all-wheat crop estimate of 27.205 MMT by Stats Canada. However, the crop peg doesn't dramatically change the supply situation.
  • Weather-watchers are noting forecasts for rains this weekend in the Southern Plains, although more rain will be needed to lessen the drought.
  • March Chicago wheat futures have remained within the boundaries of yesterday's trading range, currently trading mid-range for the day.

Live cattle futures have improved to a mostly firmer tone, although prices remain mixed.

  • Buying in the cattle pit has picked up, largely on help from triple-digit gains in the Dow Jones Industrial Average.
  • But weakness in the boxed beef market is limiting buying. Choice beef values are down 45 cents and Select is down 98 cents this morning. But strong movement at 162 loads changing hands this morning could improve demand for cash cattle.
  • December live cattle are trading in line with the bottom end of last week's $126 to $128 cash cattle range, suggesting traders look for steady trade this week. Packers' initial bids of $123 are being ignored by feedlots.

Lean hog futures are mixed, with nearbys improving to trade slightly higher.

  • Lean hog futures are being supported by the cash market, with bids steady to firmer again today.
  • Despite tightening supplies, packers are working to secure supplies for a larger Saturday kill, which points to firmer cash bids again tomorrow.
  • But traders are growing more cautious about how much higher the cash market can trend near-term since packers' profit margins have slipped into the red.
  • Traders are also concerned that pork demand will soften after holiday buying has been completed. But pork remains competitively priced compared to beef.

 

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