Market Snapshot, 10:00 a.m. CT -- (VIP) -- February 21, 2014

February 21, 2014 04:05 AM

Corn futures are 5 to 7 cents lower through the 2015 contracts.

  • Corn futures are trading weaker on disappointing weekly export sales, prospects for a record large corn harvest in 2014 (according to USDA's Ag Outlook Forum projections) and position evening ahead of the weekend.
  • Weekly corn sales of 691,400 MT for 2013-14 were below expectations. Exports of 745,000 MT were down 22% from the previous week. Net sales were down 46% from the previous week and 50% from the prior 4-week average.
  • Traders are absorbing USDA's full 2014-15 S&D tables, which were released this morning at its Outlook Forum. USDA sees the potential for a 13.985-billion-bu. corn crop and carryover rising to 2.111 billion bushels.
  • Corn futures had labored under a stronger U.S. dollar index in early trading but the index has reversed course, which has eased that selling pressure.
  • Technically, traders are watching how March futures perform at the $4.50 area, which is now acting as a support zone.
  • Gulf corn basis is 1 cent firmer for immediate delivery to stand 85 cents over March futures. This signals demand remains strong.

Soybean futures are fractionally higher in nearby contracts and fractionally to 2 cents weaker in 2014-crop contracts.

  • Soybean futures are mixed as traders even positions ahead of the weekend and absorb the slightly more positive-than-expected outlook for 2014 soybean production from USDA's outlook conference.
  • A weaker U.S. dollar index is also supportive this morning.
  • USDA, at its annual Outlook Forum, projects a 2014 soybean crop of 3.55 billion bu., and 2014-15 carryover at 285 million bushels.
  • This morning's weekly export soybean sales report were disappointing at 86,300 MT for 2013-14, which are a marketing-year low. But combined with sales of 749,100 MT for 2014-15, total weekly export sales were within the pre-report guess range.
  • Soybean exports topped 1.3 MMT, with China the top destination. The report notes China canceled 145,600 MT of old-crop beans.
  • Gulf soybean basis is steady for immediate delivery but has slipped 4 cents for March delivery to signal a softening of old-crop demand.

Wheat futures are generally 2 to 6 cents lower for all three flavors.

  • Corrective action continues to dominate wheat futures trading this morning along with weekend position evening and news from USDA on 2014-crop carryover.
  • USDA today, at its annual outlook conference, projected the 2014 wheat crop at 2.16 billion bu. and 2014-15 carryover at 587 million bushels.
  • Weekly wheat export sales of 424,500 MT for 2013-14 and 67,000 MT for 2014-15 were within expectations. But exports were a new marketing-year low.
  • The March SRW wheat futures contract is again testing support at the $6.10 area.
  • Gulf HRW wheat basis is up 10 cents for immediate delivery and 5 cents for March delivery to signal a surge in demand, but Gulf SRW basis is steady to 1 cent lower this morning.

Live cattle futures are choppy with the lead February and August through December contracts slightly higher and the April and June contracts slightly weaker. Feeder cattle are mixed.

  • Trade is limited today as traders continue to even positions ahead of this afternoon's key reports and ahead of the weekend.
  • The trade still has a bias toward steady to higher cash trade this week on ideas the wholesale market is firming and may have posted a low.
  • Cash trade could be limited, however, due to the winter storm which moved across portions of the Plains and Midwest yesterday.
  • Strength in the boxed beef market this week is also supportive for futures, as Choice beef values have moved back above $214 and movement has been solid this week.
  • Traders are evening positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 96%, Placements at 102.6% and Marketings at 95.4% of year-ago.
  • The Cold Storage Report this afternoon is expected to show beef stocks at the end of January up marginally from December, but 9% below year-ago.
  • Feeder cattle futures are generally favoring the plus side on weakness in corn futures.

Lean hog futures are slightly higher with the exception of the July contract, which is slightly weaker.

  • April lean hog futures gapped higher at the open and posting a new contract high on followthrough buying.
  • Cash prices are stronger as packers, operating with profitable cutting margins, have had to bid up for hogs all week to keep kill lines running at full capacity.
  • Traders are shrugging off concerns futures are severely overbought according to the Relative Strength Index, but some traders are cautious about chasing the gap-higher opening expecting weekend postion-squaring to eventually trim gains.
  • Concerns about the spread of PEDV continues to offer underlying support for contracts.
  • Traders expect this afternoon's Cold Storage Report to show pork stocks at the end of January up 9.3% from last month and in line with year-ago levels.
  • Also supportive is yesterday's surge in the pork cutout value, which was up $2.88 on strong movement of more than 400 loads.
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