Market Snapshot, Noon (VIP) -- November 21, 2012

November 21, 2012 06:00 AM
 

Corn futures are 2 to 4 cents lower in the December through July contract, while far-deferred months are fractionally higher.

  • Spillover from soybeans and profit-taking ahead of the Thanksgiving break continues to put light pressure on nearby corn contracts.
  • But tight supplies and thoughts export demand may be improving due to shipping delays in Brazil continue to limit selling interest.
  • Gulf basis levels surged earlier this week, and while the amount of gains has slowed to pennies, levels are steady to firmer again today. Besides tight supplies and improved demand, this can also be attributed to shipping troubles on U.S. rivers.

 

Soybean futures have pared losses to just 1 to 3 cents.

  • A choppy U.S. dollar index, fiscal cliff worries in the U.S. and uncertainty about bailout money for Greece are encouraging traders to trim risk exposure ahead of Thanksgiving.
  • Plus, recent improvement in weather in Brazil and Argentina boost ideas South American production will be record-large.
  • But selling interest is also being limited by signs this week that bargain buying is occurring.
  • Today, USDA announced that China bought 120,000 MT of soybeans and 20,000 MT of soyoil and unknown destinations purchased 56,000 MT of soyoil. All of these buys are for 2012-13 delivery. This follows other soyoil sales this week and last week.

 

Wheat futures continue to post gains around 1 to 3 cents at all three locations.

  • Wheat continues to benefit from record-setting high temps and dryness in the U.S. Southern and Central Plains, which has led to a steady decline in crop condition ratings.
  • The market was also reminded of tightening Black Sea region supplies when Russia's deputy ag minister raised the ceiling on grain exports for 2012-13 to 15.5 MMT. He says 11 MMT of grain have already been exported, which means the country will be a less dominant force on the export market the remainder of the 2012-13 marketing year.
  • But countering this is a reminder U.S. wheat has struggled to attract export demand despite tightening world stocks. Today Iraq bought 350,000 MT of wheat from Australia, Canada and Russia for December and January delivery.
  • Spillover pressure from corn and soybeans is also limiting gains.

 

Live cattle futures continue to enjoy moderate gains while feeder cattle futures have extended early gains to trade moderately to sharply higher amid thin trading volume.

  • Packers in Texas have upped bids to $126 which is steady with the top of last week's trading range, signaling higher trade is likely when it starts today or Friday. Very light sales took place at $1.00 to $1.50 firmer prices yesterday in the South.
  • Firmer prices are seen as justified by ongoing strength in the boxed beef market and slightly tighter showlists. Choice boxed beef cuts rose 35 cents and Select cuts firmed $1.17 this morning; movement was also solid at 120 loads.
  • Following the Thanksgiving holiday, retailers will begin stocking coolers for the Christmas holiday season. This along with tightening supply prospects will continue to support cattle.
  • Feeder cattle futures are enjoying corrective short-covering as supplies are tightening and corn futures are facing light pressure today.
  • Outside markets are mildly supportive with the stock market mildly firmer and the U.S. dollar index favoring the downside.

 

Lean hog futures have mildly improved gains in all but far-deferred months, which are narrowly mixed.

  • Lean hog futures are benefiting from spillover from the live cattle market.
  • Also, the cash hog market is steady to firmer today as some packers are short-bought.
  • The market is also benefiting from impressive morning pork movement of 57.25 loads, which signals retailers plan to feature pork after Thanksgiving.
  • But nearby futures are at a premium to the cash hog index, which is keeping buying interest in check.
  • Also, traders remain hesitant to add long positions ahead of what is expected to be a bearish Cold Storage Report this afternoon. Pre-report expectations are for USDA to peg frozen pork stocks as of Oct. 31 at 632.5 million lbs., which would be more than 100 million lbs. above the previous record high for the month.
     
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