Market Snapshot, 10:00 a.m. CT -- (VIP) -- February 18, 2014

February 18, 2014 03:54 AM

Corn futures are around 2 to 3 cents higher this morning.

  • Corn futures are enjoying spillover from soybeans and wheat. A weaker U.S. dollar index is also supportive.
  • The technical posture of the market is also mildly friendly as the front-month has established the $4.40 area as support and appears headed for another test of $4.50.
  • A spike in farmer sales last week has eased basis at interior locations.
  • However, winter weather slowed transportation to the Gulf. Today, Gulf corn basis is steady to 2 cents higher for February through April delivery, though May delivery is down 3 cents.

Old-crop soybeans are 15 to 19 cents higher, with nearbys leading to the upside. September is up 11 cents, while new-crop are 5 to 7 cents higher.

  • Reminders of strong demand and tight old-crop carryover supplies are lifting beans to start the week.
  • The market is also seeing some technical buying as the front month moved back above $13.50. Weakness in the U.S. dollar index is encouraging of this, too.
  • Traders are hopeful this morning's weekly export inspections update will again reflect strong demand.
  • Also, the market expects NOPA members will report a record-high crush for January around 162.4 million bushels.
  • Meanwhile, dryness concerns in Brazil are an underlying source of support. AgRural has cut its Brazilian soybean forecast by 1.8 MMT to 87 MMT due to late-season drought impacts.
  • Gulf soybean basis is steady this morning to signal supplies and demand are in balance.

Wheat futures are roughly 5 to 9 cents higher in the SRW and HRS markets, while HRW is around 3 to 5 cents higher.

  • A weaker U.S. dollar index and generally risk-on stance across the commodity sector is lifting wheat this morning.
  • Another week of dry weather for the Southern Plains keeps drought concerns in mind, especially with temps in Texas expected to top 80 degrees today.
  • Meanwhile, trader remain aware that transportation disruptions in Canada are turning importers like Japan to the U.S.
  • Traders are hopeful this will be reflected in this morning's weekly export inspections report.

Live cattle futures gapped slightly higher on the open and are moderately higher through the June contract, with deferred months slightly higher.

  • Traders are responding positively to steady to higher cash cattle trade at $142 in Kansas and Texas and $143 in Nebraska on Friday. This spurs thoughts the cattle market may have put in a low. Nearby contracts are in line with these prices.
  • Strong gains in the boxed beef market Monday have spurred similar thoughts. Choice boxed beef surged $3.30 and Select rose $2.06. Movement was a solid 153 loads.
  • Showlist estimates are tighter in Nebraska and Kansas this week and steady in Colorado and Texas.
  • However, packers continue to deal with deeply negative cutting margins, which could make them resist paying steady to higher prices again this week.
  • Spillover from live cattle is lifting feeder cattle futures, as is a lower U.S. dollar index.

April lean hogs gapped higher on the open and are enjoying $1-plus gains. Other contracts are slightly to moderately higher.

  • Steady to higher cash hog bids today are lifting the hog market as packers are in need of supplies following weather disruptions Monday and last week. Closures due to Presidents Day Monday are also increasing near-term needs.
  • Packer profit margins remain in the black, making them more willing to raise bids.
  • The pork cutout value firmed 68 cents Monday, but movement slowed to 258.4 loads. Strong gains in loins and butts more than offset declines in ribs, hams and bellies.
  • Traders in April lean hogs are not concerned about the wide premium it holds to the cash hog index, as they are extending the gap today.
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