Market Snapshot, Noon CT (VIP) -- January 3, 2013

January 3, 2013 05:59 AM
 

 

Corn futures remain mostly 2 to 6 cents lower, with nearby contracts seeing the lightest losses.

  • Bears maintain the upper hand in the corn market due to recent chart damage, weakness in the soybean pit and strength in the U.S. dollar index.
  • Also, the market remains concerned about an extended period of lackluster export demand.
  • But basis levels at interior locations remain at record-high levels for this time of year, which signals a limited quantity of corn is available.
  • Also, Gulf basis levels were steady to a penny higher this morning and at midday, possibly thanks to the imminent Mississippi River Closure to barge traffic.
  • Investors continue to watch the 200-day moving average that has acted as support since June. The March contract continues to respect this level, which intersects at $6.83 1/2 today.

 

Soybean futures have softened slightly and are posting losses in the teens in most contracts.

  • Strength in the U.S. dollar index and a technical posture that favors market bears continues to weigh on bean futures.
  • Also, news China canceled 315,000 MT of U.S. soybean orders for 2012-13 reminds the market the country may soon begin booking supplies from Brazil over the U.S. as harvest of early planted beans is getting started in South America.
  • However, crushers in the U.S. are thought to have limited coverage of near-term needs, which along with tight supplies, is keeping interior basis levels at historically high levels.

 

Chicago wheat futures have moved back into negative territory to trade 1 to 4 cents lower. Kansas City wheat is mixed and Minneapolis is mostly 4 cents higher.

  • Kansas City and Minneapolis wheat continue to enjoy light short-covering on ideas the downside was overdone yesterday.
  • Also, today's Drought Monitor update reminds the market that the winter wheat crop entered dormancy in tough shape and that prospects are not rosy for emergence this spring.
  • But losses in the corn and soybean markets and dollar strength makes few willing to add long positions and has encouraged light profit taking in Chicago wheat.
  • The market needs fresh export news to improve its much-damaged technical standing. Traders are impatient waiting for U.S. wheat to attract value buying.

 

Live cattle futures have firmed to trade moderately to sharply higher. Feeder cattle futures have also extended early gains and are moderately higher.

  • The February live cattle contract has benefited from some technical buying as its move through last week's high triggered buy stops.
  • Support also comes from expectations for firmer cash cattle trade this week thanks to strength in the boxed beef market early this week. Also, aversion of the fiscal cliff is expected to give consumer sentiment a boost, which often translates to strong beef demand.
  • This morning, Choice and Select cuts rose $1.44 and $1.54, respectively, and movement improved to 118 loads.
  • Traders are ignoring the hearty premium futures hold to last week's mostly $127 cash trade and strength in the U.S. dollar index.
  • Feeder cattle futures are benefiting from weakness in the corn market and spillover from live cattle.

 

Lean hog futures have firmed to post moderate to sharp gains in all but far deferred months, which are steady to slightly higher.

  • Lean hog futures continue to benefit from strength in the cash hog market as packers found themselves short bought for this holiday-shortened week.
  • But the combination of firmer bids and softer pork prices has pulled packer profit margins deeper into the red, which could cause the cash hog market to soften in the near future.
  • Traders appear unconcerned about the steep premium February futures hold to the cash hog index, signaling they anticipate firmer cash prices ahead.
  • Also, the market seems to believe the downside was overdone Monday in reaction to the Quarterly Hogs & Pigs Report that pointed to at least steady pork production in 2013.

 

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