Market Snapshot, Noon CT (VIP) -- November 30, 2012

November 30, 2012 06:11 AM
 

Corn futures continue to post losses around 8 cents through the July contract with deferred months seeing lighter losses.

  • Corn traders are booking profits to wrap up the week and month. Spillover pressure from soybeans and wheat are encouraging of this, as is general risk aversion amid fiscal cliff uncertainty.
  • Light pressure also stems from news China's National Bureau of Statistics says 2012 corn production rose 8% from last year to a record 208.12 MMT.
  • But downside risk remains limited by tight supplies. Today's light deliveries against December corn futures and the fact that they were actively stopped point to this. But as this was expected, it is not sparking any buying interest.

 

Soybean futures are trading near session lows, with January through May futures around 16 cents lower and deferred months posting lighter, double-digit losses.

  • Traders are booking profits to wrap up the month after November saw futures stage a corrective rally.
  • But buying interest has thus far been limited to corrective short-covering as tight supplies and strong export demand is seen as factored into prices -- for now.
  • Plus dry areas of Brazil have benefited from recent rain with more in the forecast. This ups the odds the country will produce a record-large crop.
  • Meanwhile, Argentina is receiving too much rain, which will likely increase bean acres but also push back the date exportable supplies will hit the market.
  • Strong basis levels across the U.S. continue to limit downside risk for soybean futures, however.

 

Wheat futures have further extended losses. Chicago wheat is now mostly 15 to 23 cents lower, Kansas City wheat is mostly 19 cents lower and Minneapolis wheat is mostly 11 to 14 cents lower.

  • Much heavier-than-expected deliveries against December Chicago wheat futures at 2,119 contracts has weighed on wheat futures throughout today's session. That encouraged profit-taking pressure earlier in the day.
  • The sharp extension of losses, however, came on technical-based selling as futures violated key moving averages that were cleared earlier in the week. Technically, futures have retreated from the top of their respective choppy trading ranges.
  • End-of-the-month positioning is also weighing on wheat futures, as is the looming fiscal cliff. A lack of progress on the fiscal cliff talks is discouraging investors.

 

Live cattle futures are remain moderately to sharply lower through the June contract. Farther deferred futures are slightly lower.

  • Much of today's price pressure is technically based as sell stops were triggered on the drop through key support levels earlier this morning.
  • Additional pressure is coming from macro-economic uncertainty as fiscal cliff talks proceed with seemingly little progress.
  • Traders are still waiting on active cash cattle trade to get underway in the Plains. With December futures now trading at a discount to the bottom end of last week's cash range, there's an indication cash expectations have been reeled in.
  • Feeder cattle futures are mostly lower on spillover pressure from live cattle, although weakness in corn is helping limit losses.

 

Lean hog futures are mixed with the December and April contracts slightly firmer, while other contract months are slightly lower.

  • Strength in the cash hog market continues to support December lean hog futures despite the $4-plus premium the contract holds to the cash index. Cash hog bids are steady to $1 higher at most locations today as packers work to secure supplies for early next week.
  • Deferred lean hog futures are mostly lower amid light profit-taking pressure and ideas recent gains have been overdone.
  • Also encouraging the light corrective selling are fiscal cliff concerns as lawmakers are seemingly making little progress on that front.
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