Market Snapshot, Noon CT (VIP) -- November 29, 2012

November 29, 2012 06:08 AM
 

Corn futures are lower through the December 2013 contract, while far-deferred months are narrowly mixed.

  • This morning's disappointing corn export sales tally continues to pressure futures. This plus steady to lower Gulf basis levels are reminding traders of lackluster demand as they even positions ahead of month-end.
  • Also, outside markets are less supportive at midday as some of the fiscal cliff talk optimism has faded. The dollar has backed off early losses and the stock market has pared gains.
  • News the International Grain Council trimmed its 2012-13 global corn carryover forecast by 1 MMT to 116 MMT is helping to limit pressure, however, as this is well below 2011-12 global carryover of 134 MMT.
  • The December contract enters delivery tomorrow. Traders do not expect many deliveries due to a strong cash market.
  • Traders also continue to monitor the weather in Argentina, the No. 2 corn exporter behind the U.S. Soggy conditions up the chances producers will switch unplanted acres to beans. It also pushes back the timeline for when fresh export supplies will hit the market.

 

Soybean futures have softened to narrowly mixed trade.

  • This morning's weekly soybean export sales of 319,100 MT fell well short of expectations and is encouraging profit-taking as traders even the books for November.
  • Export sales of soymeal and soyoil were impressive, however.
  • Early support from news Chinese soy demand is expected to remain strong the first quarter of 2013 has faded, signaling this is already somewhat factored into prices.
  • Light pressure also stems from news the International Grains Council raised its global soybean carryover projection for 2012-13 by 1 MMT to 28 MMT and its production projection by 3 MMT to 267 MMT.

 

Wheat futures have softened to trade mostly 3 to 9 cents lower in Chicago, 5 to 7 cents lower in Kansas City and 4 to 6 cents lower in Minneapolis.

  • Profit-taking has picked up in the wheat market after strong gains earlier this week.
  • Recent bearish export demand news is encouraging of this.
  • For one, this morning's weekly wheat export sales tally of 279,300 MT for 2012-13 came in below expectations.
  • Also, it now appears Ukraine has raised its wheat export cap to 5.8 MMT and it is still uncertain whether the Dec. 1 banning of exports will even happen. The Ukraine Grain Association says it believes the country could export 6.5 MMT of wheat without causing domestic shortages.
  • Selling interest is limited to profit-taking in wheat futures as the latest National Drought Monitor showed drought expanded and intensified across winter wheat country.
  • The International Grains Council today trimmed its global wheat production forecast for 2012-13 by 1 MMT but raised its carryover stocks projection by a like amount, rendering the update largely a nonevent.

 

Live cattle futures continue to enjoy slight gains in most contracts. Feeder cattle futures have also improved to trade slightly to moderately higher.

  • Cattle futures are favoring the upside as they wait for cash cattle trade to get underway. December futures are trading in line with trade last week and light sales earlier this week.
  • This morning, Choice boxed beef cuts rose $1.23 while Select cuts slid 36 cents. Movement was decent at 112 loads.
  • Feedlots feel gains in Choice values, tightening supplies and lower showlists numbers this week justify cash trade above last week's $127 to $128.
  • But packer demand is thought to be slowing, as cutting margins are deep in the red and beef demand has generally failed to impress since Thanksgiving, despite heavy retailer promotion of beef products.
  • Disappointing weekly beef export sales tally of 11,800 MT is also limiting buying interest.
  • Feeder cattle futures are benefiting from weakness in nearby corn futures.

 

Lean hog futures have softened to choppy trade.

  • As outside markets weakened, some light profit-taking began in lean hog futures.
  • But downside risk is limited considering strength in the cash and product markets.
  • Cash hog bids are steady to as much as $3 higher today, which is supporting futures as this signals strong demand.
  • But countering this is that fact that nearby futures are at a sharp premium to the cash hog index. The index has recently reversed course and is now trending higher, but it has a lot of distance to make up in two weeks prior to the December contract's expiration.
  • Light support also comes from gains in the pork cutout market yesterday and solid movement. Morning pork movement today was solid at 25.5 loads.
     
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