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

January 10, 2014 04:22 AM
 

Corn futures continue to post losses of 1 to 3 cents, with deferred contracts leading losses.

  • Traders are working to trim risk exposure ahead of this morning's USDA reports. This data set has historically delivered major market surprises
  • Pre-report expectations are for USDA to raise its 2013 production estimate by around 64 million bu. to 14.053 million bushels.
  • Traders also expect USDA to peg 2013-14 carryover around 1.844 billion bu., a 52 million bu. increase from November. Dec. 1 corn stockpiles are expected to come in at 10.77 billion bushels.
  • Pressure is being limited by USDA's announcement that an unknown destination purchased 180,000 MT of corn for 2013-14.
  • However, Gulf corn basis is down 1 to 2 cents for February and March delivery this morning.

Soybean futures have surged preceding USDA's reports this morning. January through August futures are posting gains in the teens while deferreds are 5 to 8 cents higher.

  • Soybean futures enjoyed short-covering ahead of USDA's barrage of reports this afternoon. Buying picked up on the front-month's move back above $13.00. Sharp weakness in the U.S. dollar index on worrisome jobs report is also supportive.
  • Pre-report expectations are for USDA to raise its production estimate slightly to 3.27 billion bushels. Carryover is expected to come in at 150.7 million bu., up 700,000 from USDA's November update.
  • Dec. 1 soybean stockpiles are expected to come in at 2.17 billion bushels.
  • Support also stems from news China's soybean imports for December of 7.4 MMT were a record monthly high. Imports for the year of 63.38 MMT were a record high and up 8.6% from the year prior.
  • Support also stems from news China purchased 216,000 MT of soybeans for 2014-15.
  • Gulf soybean basis slid 5 cents for January delivery this morning.

Wheat futures have improved to post fractional to 2-cent gains in the SRW market, while HRW is up 1 to 5 cents and HRS is 1 to 9 cents higher.

  • Short-covering ahead of USDA's reports and weakness in the dollar index are lifting the wheat market.
  • Traders expect USDA to peg winter wheat plantings for 2014-15 around 43.7 million acres, which would be up slightly from the current season.
  • Traders also expect USDA to raise its 2013-14 U.S. carryover peg by around 16 million bu. to 558.8 million bushels.
  • Light support also stems from news Venezuela purchased 125,700 MT of U.S. wheat for 2013-14.

Live and feeder cattle futures are slightly higher in early trade.

  • A few record-setting sales in the dressed market in Nebraska and Iowa at $222 and $220, respectively, has spurred ideas cash cattle trade will get underway at higher prices this week compared to last week's record-highs.
  • Sales took place at mostly $137 in the Southern Plains last week; futures are just slightly below these prices, signaling some concerns a top may be near.
  • Strength in the boxed beef market supports ideas higher cash cattle trade may be seen. Yesterday, Choice cuts surged another $1.92 to $212.05 per cwt. and Select surged $1.98 to $209.05 per cwt. -- both are record highs.
  • This has notably improved packer profit margins, though they remain in the red.
  • Sharp losses in the U.S. dollar index and softer corn prices are lifting feeder cattle futures.

Lean hog futures are posting slight to moderate gains through the August contract, with deferred months mixed.

  • The front-month posted a downside breakout yesterday, but moved well off this level into the close. This, along with sharp dollar weakness, is encouraging short-covering to wrap up the week.
  • Traders are also encouraged by the fact that other contracts were able to respect near-term support levels.
  • Also, the pork cutout value firmed 64 cents yesterday and movement was decent at 349.11 loads. This plus recent improvement in movement keeps hopes the product market is working on a low alive.
  • Packers are again enjoying solid profit margins. Nevertheless, bids are steady to lower as Saturday's kill is expected to be lighter than earlier anticipated.
  • Wintry precip could slow hog movement in the Corn Belt today.
  • While the cash hog index continues to improve, it is still at nearly a $5 discount to the February contract.
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