Market Snapshot, Noon CT (VIP) -- November 27, 2012

November 27, 2012 06:04 AM
 

Corn futures continue to enjoy slight gains around 3 to 4 cents.

  • Corn futures continue to benefit from spillover from soybean and wheat.
  • Also, the corn market's recent closes above the 50-day moving average are encouraging some light technical buying.
  • Traders also continue to monitor the weather in South America. Of note, rains are returning to Argentina, which ups the odds some unplanted corn acres will be switched to beans.
  • Also, U.S. export demand has recently benefited from port congestion in Brazil. Gulf basis at midday is 2 cents higher for December delivery, while deferred delivery is steady. Market bulls are hopeful this signals more export news is on the horizon.

 

Soybean futures have slightly extended gains to trade roughly 14 to 21 cents higher, with nearby contracts leading gains.

  • Concerns about dryness in southern areas of Brazil are supporting soybean futures; a large South American crop is essential in light of the small U.S. bean crop.
  • And while a return of soggy conditions in Argentina ups the odds unplanted corn acres will be switched to beans, it also raises concerns about early bean crop development.
  • Steady to firmer Gulf basis levels at midday have traders watching for more export news.
  • Soybeans are also benefiting from signs China's economy is improving, which could translate to even stronger Chinese soy demand going forward.

 

Wheat futures are 18 to 19 cents higher in Kansas City and 15 to 17 cents higher in Chicago and Minneapolis.

  • Wheat futures are benefiting from yesterday's record-low final fall crop condition ratings from USDA; just 33% of the crop was rated "good" to "excellent," which is 10 percentage points behind the previous record-low rating from 1999-2000.
  • The forecast for mostly dry weather and a return of above-normal temps across the Plains this week is also worrisome.
  • Light support also comes from news China's wheat imports are expected to rise 10% in 2013, as production is expected to decline while consumption is expected to rise.
  • Meanwhile, supplies in the Black Sea region are dwindling and Ukraine will halt exports on Dec. 1. This is expected to give U.S. wheat a boost on the global export market.

 

Live cattle futures continue to enjoy slight gains across the board. Feeder cattle futures are still posting slight losses.

  • The boxed beef market improved this morning with Choice cuts firming 93 cents and Select cuts up $1.47. Movement also picked up; 100 loads have already changed hands.
  • The historically wide spread between Choice and Select boxed beef values (currently $21.54) signals tightening supplies and increased demand for high-quality meat for year-end features.
  • Boxed beef strength along with tighter showlist estimates this week are supporting ideas cash cattle trade will likely take place above last week's $127 to $128 in the Plains. Light sales took place at steady prices in Texas yesterday.
  • Dollar strength continues to limit buying interest, however.

 

Lean hog futures are posting slight losses with deferred months leading declines.

  • December lean hogs remain at a hefty premium to the cash hog index, which is pressuring nearby contracts.
  • Plus, dollar strength is encouraging some profit-taking after recent strong gains.
  • But a steady to higher cash hog market is limiting selling interest. While supplies are plentiful, some packers were short-bought on near-term needs. Wide packer profit margins make them more willing to raise bids.
  • Also, retailers are beginning to stock their coolers for the Christmas holiday season. This will continue to support the pork cutout market.
     
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