Market Snapshot, Noon CT (VIP) -- December 7, 2012

December 7, 2012 06:06 AM
 

Corn futures have softened to post losses in the teens through the July contract, with deferred months down roughly 7 to 8 cents.

  • While the dollar index has moved well off its early highs, traders continue to remove risk ahead of the weekend and on technical selling as futures moved through support at the 50-day moving average today.
  • Recent disappointing export sales data and steady to lower Gulf basis levels that signal no export demand news is on the horizon remind traders of demand destruction.
  • The same can be said for recent Taiwan purchases of Brazilian corn.

 

Soybean futures continue to see losses around 6 to 10 cents.

  • Soybean futures have climbed steadily this week. Today dollar strength is encouraging some to take advantage of such gains by booking profits.
  • Otherwise, selling interest as recent daily sales announcements and weekly export sales tallies have signaled still-strong demand.
  • Today, USDA announced China bought 115,000 MT of beans for 2012-13.
  • But with prospects for a large South American crop on traders' minds, even more impressive export news or a weather scare in Brazil or Argentina will be needed for the market to move above tough resistance at $15.00.

 

Wheat futures have softened to trade mostly 6 to 8 cents lower in Chicago and Kansas City while Minneapolis wheat is down 3 to 5 cents.

  • Wheat futures have softened along with corn as the two are tied for feed use.
  • While dryness on the U.S. Plains are worrisome, it is too early in the season for traders to get overly excited about drought there.
  • But dryness concerns in the U.S., Ukraine and Europe will continue to limit the market's downside risk.
  • News South Korean flour mills bought two cargoes of U.S. wheat overnight is also limiting pressure.

 

Live cattle futures remains under slight to moderate pressure at midday. Feeder cattle futures are mixed with nearbys favoring the upside.

  • Traders continue to book profits as they wait for cash cattle trade to get underway.
  • Poor packer margins and heavier showlist estimates, along with softer beef prices this week have most traders expecting lower cash cattle trade.
  • With December futures in line with the top end of last week's $125 to $126 trading range, this could open up some downside risk.
  • A 96-cent decline in Choice boxed beef values, a $1.47 fall in Select cuts and unimpressive movement of 87 loads adds to the negative tone.
  • But the fact that dollar strength has backed off its early gains is limiting pressure.
  • Softer corn prices continue to encourage light buying interest in feeder cattle futures.

 

Lean hog futures are posting slight to moderate losses to start today's session.

  • Steady to as much as $3 lower cash hog bids today solidify ideas the cash hog market has put in a near-term top and that demand is fading.
  • Adding to such ideas was softer pork cutout values yesterday, though movement remained strong.
  • But downside risk remains limited by ideas supplies will tighten early in 2013.
  • Concerns about the possibility Russia may halt exports of U.S. pork products as a retaliatory measure in response to the U.S.'s passage of Permanent Normal Trade Relations with the country is adding to the risk-off stance.
  • Also, the fact that traders appear comfortable extending the discount nearby futures hold to the cash hog index with just a week left until the December contract expires signals traders expect cash prices to continue to soften over the near-term.
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