Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 13, 2014

January 13, 2014 04:03 AM

Corn futures are posting losses around 1 to 3 cents this morning.

  • Overnight gains in the corn market have given way to mild profit-taking.
  • The corn market surged Friday following friendly USDA report data. USDA's lower 2013 corn crop peg and its record first quarter use peg should limit downside risk to mild profit-taking.
  • News that South Korea bought 137,000 MT of U.S. corn originally destined for China at a discounted price also reminds traders of the ongoing issues surrounding the rejection of U.S. corn cargoes to China.
  • Gulf basis is delivering mixed signals this morning, as it dropped 2 cents for January delivery but firmed 2 cents for February.
  • This morning's Weekly Export Inspections Report will provide another read on export demand.

Soybean futures have reversed course to trade 1 to 7 cents higher, with nearbys leading gains.

  • Light support for soybeans stems from a forecast for a return of hot, dry conditions for Argentina. But this is countered by a favorable weather forecast for Brazil.
  • Traders also have USDA's Friday reports on their minds, which also delivered mixed signals. While USDA raised the size of the soybean crop a bit more than expected, it left 2013-14 carryover unchanged at 150 million bu. due to stronger-than-expected (record-setting) first quarter use.
  • Support also stems from USDA's announcement of a 140,000 MT soybean sale to unknown destinations for 2013-14 delivery.
  • Gulf soybean basis rose a penny for immediate delivery this morning, possibly signaling more export demand news is ahead.

SRW wheat futures are mostly 5 to 6 cents higher this morning, while HRW and HRS wheat are fractionally to 3 cents higher.

  • News Egypt bought 55,000 MT of U.S. SRW wheat is lifting that flavor today as it signals U.S. wheat is once again competitive. Egypt is a value buyer.
  • The market is also benefiting from Friday's lower-than-expected all winter wheat seedings peg of 41.892 million acres. Countering this, however, is USDA's larger-than-expected U.S. wheat carryover peg, as well as an increase in global wheat carryover.
  • The market is also benefiting from efforts to correct the technically oversold condition of many contracts.
  • Buying interest is being tempered by news Argentina's ag ministry raised its 2013-14 wheat crop estimate by 200,000 MT to 9.2 MMT. Exporters and importers are still waiting for the Argentine government to announce wheat export permits for 2013-14.
  • Ukraine exported 19.85 MMT of grain so far this marketing year, which is up 34% from year-ago, according to the country's ag ministry.

Live cattle futures are narrowly mixed this morning. Feeder cattle futures, on the other hand, are moderately lower.

  • A record-setting performance in both the product and cash markets last week is lifting some live cattle futures to start the week. However, uncertainty about how long such gains will last is keeping bullish enthusiasm in check and encouraging profit-taking in feeders.
  • Choice and Select cuts surged steadily higher last week, with Choice ending the week at $214.98 per cwt. and Select finishing at $211.58 per cwt. -- both record highs. The rally has slowed movement notably over the past week, but thus far price strength has shown no sign of faltering.
  • The boxed beef run-up spurred another week of record-high cash cattle trade at $139 to $140 on the Plains (mostly $139 in Texas and Kansas), up $2 to $3 from the bulk of trade the week prior.
  • The product market gains have also improved packer cutting margins immensely, though they remain in the red.
  • Showlist estimates and boxed beef performance will be key to this week's cash action.
  • Futures remain $2 to $3 below the cash market, signaling trader caution.

Lean hog futures are posting slight losses this morning.

  • Traders are favoring the downside as they return following from the weekend.
  • Light pressure stems from the pork market's ongoing struggle to put in a seasonal low. The pork cutout value fell by 11 cents Friday. But movement was decent at 366.96 loads.
  • While packers are in need of supplies after multiple travel disruptions last week, hog supplies are readily available and packers are again enjoying solid profit margins. This combination is keeping early cash hog bids mostly steady.
  • Light pressure also stems from the $4-plus premium the February contract holds to the cash hog index. A lack of urgency to narrow this spread signals friendly cash market expectations, however.
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