Market Snapshot, 10:00 a.m. CT -- (VIP) -- February 6, 2014

February 6, 2014 04:00 AM

Corn futures are favoring a firmer tone in mixed trade, with nearbys around a penny higher.

  • Traders are encouraged by today's weekly export sales data that showed recent price gains have yet to slow demand.
  • In fact, sales of more than 1.7 MMT for 2013-14 were highly impressive and well above expectations.
  • Corn export commitments for 2013-14 are running 145% ahead of year-ago, whereas USDA projects exports for the 2013-14 marketing year will exceed year-ago by 98.4%.
  • Gains are being somewhat tempered, however, by news China canceled 220,000 MT of old-crop corn buys, though this was not unexpected.
  • A softer U.S. dollar index and gains in the bean market are also supportive.

Soybean futures are double-digit higher in old-crop futures while deferred months are up 5 to 8 cents.

  • Technical buying is lifting nearby soybean futures as traders are encouraged by the market's ability to sustain and extend gains above the $13.00 mark. Nearby contracts appear headed for a test of the December highs.
  • Support also stems from another solid showing in USDA's weekly export sales report. Export sales of 577,000 MT for 2013-14 and 219,500 MT for 2014-15 came in near the upper end of pre-report expectations. Exports were also strong at more than 1.508 MMT.
  • The report did include decreases of 530,500 MT by unknown destinations, but since China was the lead buyer of old-crop beans, traders are not overly concerned.
  • In addition, soymeal sales were also highly impressive the week ended Jan. 30.
  • The market also remains mildly concerned about heat and dryness in some areas of Brazil, although this is a boon in terms of getting the bean cropped shipped.

Wheat futures are a mixed bag this morning. SRW wheat is 2 to 3 cents lower, but HRW wheat is steady to 2 cents higher. HRS wheat is posting gains of 1 to 9 cents.

  • While SRW wheat is seeing some mild profit-taking after recent gains, other markets are benefiting from crop concerns as well as recent signs of improved demand.
  • Weekly wheat export sales of 638,800 MT for 2013-14 and 94,800 MT for 2014-15 came in near the upper end of pre-report expectations and reflect solid demand.
  • Canadian shipping delays have forced Japan to increase its purchases of U.S. wheat. This is supporting HRS this morning. Once the U.S. soybean shipping season slows, it could provide an opportunity for an increase in U.S. wheat business.
  • Light support also stems from news USDA's ag attaché in Canada says total production of wheat, barley, oats and corn is forecast to fall 20% in 2014 from last year's record crop to 52 MMT.
  • An expansion of drought for much of winter wheat country keeps recently reported crop deterioration in mind.
  • A weaker U.S. dollar index and gains in corn is also supportive.

Live cattle futures are narrowly mixed, while feeder cattle futures are slightly lower.

  • Live cattle futures are benefiting from an uptick in beef movement yesterday that spurred ideas beef prices may finally be reaching value levels.
  • The uptick to 179 loads came on a $3.85 drop in Choice boxed beef and a $2.58 decline in Select cuts. However, with both cuts just above $216.60 per cwt., prices are still historically strong.
  • Traders also feel the downside has been overdone in nearby contracts, since they remain below the $140 to $141 area where initial bids are expected to be placed. Last week, trade took place at $144 to $145.
  • Tighter showlists, winter weather and stressfully cold conditions have some feedlots hoping for steady prices, however.
  • Countering this are negative packer profit margins, which raises concern about packer demand.
  • Strength in the corn market is weighing on feeder cattle futures to start the week.

Lean hog futures are split, with nearbys slightly to moderately lower and deferreds posting similar gains.

  • Hog movement is expected to remain limited for the rest of the week as the Midwest continues to deal with bitter cold and the recent snow storm that dumped major amounts of snow on some areas. As a result, cash hog bids are steady to higher again today.
  • The impact of the porcine epidemic diarrhea virus (PEDV) remains an underlying source of support.
  • Recent improvement in the pork cutout value yesterday adds to the positive tone. Traders are hopeful record-high beef prices will lift pork demand.
  • While the pork cutout value slid 41 cents yesterday, it is up $1.66 over the past week and movement picked up to 439.15 loads.
  • A weaker U.S. dollar index is adding incentive for traders to engage in some followthrough buys today.
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