Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 16, 2014

January 16, 2014 04:03 AM

Corn future are posting gains around 2 to 3 cents this morning.

  • Corn futures are mildly higher as traders weigh strong weekly export sales against a corn order cancellation.
  • This morning's weekly corn export sales of 821,000 MT for 2013-14 topped expectations by a wide margin. Also of note, Egypt -- traditionally a value buyer -- was the top buyer.
  • But countering this is USDA's announcement that an unknown buyer canceled an order for 126,000 MT of U.S. corn for 2013-14. Traders suspect this is China given the country's recent rejections of corn and DDGs due to the presence of unapproved GMO material.
  • Light pressure also stems from news Strategies Grains edged its 2014-15 EU corn crop forecast up by 100,000 MT to 64.8 MMT.

Soybean futures are enjoying gains of 3 to 8 cents this morning; the market has backed off its early highs.

  • Reminders of strong demand for U.S. soybeans are lifting the bean market this morning.
  • For one, weekly soybean export sales of 701,500 MT for 2013-14 and 525,300 MT for 2014-15 topped expectations by a wide margin.
  • In addition, USDA announced daily sales to China for 60,000 MT of U.S. beans for 2013-14 and 405,500 MT for 2014-15 delivery.
  • The market also learned that China's Ministry of Commerce has nearly doubled its forecast for January soybean imports to 4.61 MMT based on the strong pace the first half of the month.
  • And a 10-cent surge in Gulf basis for immediate delivery signals more demand news may be around the corner. April delivery also jumped 5 cents while other months held steady.

Wheat futures are down a penny or two in the SRW market, while HRW and HRS wheat are mostly 1 to 3 cents higher.

  • Light spillover support from the corn market is encouraging mild short-covering in the HRW and HRS markets. However, the overall posture of all three flavors clearly favors market bears.
  • This morning's Weekly Export Sales Report came in as expected with sales of 319,900 MT for 2013-14 and 82,000 MT for 2014-15. However, exports of 586,800 MT were up 41% from last week and 53% from the four-week average.
  • News India's government may soon raise the amount of wheat it authorizes for exports due to a record-large crop and ample stockpiles adds to the negative tone.
  • Countering this, however, is news Strategie Grains trimmed its forecast for the 2014 EU soft wheat crop by 300,000 MT to 137.7 MMT.
  • Concerns about drought in the Southern and Central Plains remain limited, despite the dry, warm forecast for the region.

February live cattle gapped sharply higher on the open and are posting gains around $1.00. The rest of the market is favoring a firmer tone in mixed trade. Feeder cattle are also choppy with an upside bias.

  • Cash cattle trade got underway yesterday at record-high prices of $142 in Texas and Kansas, which is up $3 from the bulk of trade last week in the region. Nebraska has seen trade at $143 to $144. Some feedlots held out for even higher prices, however.
  • This surge in the cash market propelled a gap-higher start for the front-month. However, it is still around $1.50 below cash prices on the Southern Plains. Other months are seeing a sell-the-fact reaction. There is also unease that a top is near.
  • Another week of record-setting cash action was spurred by a very impressive run-up in the boxed beef market and tight market-ready supplies this week.
  • Blizzard conditions in some areas of the Northern Plains today are also limiting available supplies in these regions.
  • Choice boxed beef values surged $3.58 yesterday while Select jumped $2.56. Movement was also decent considering the price surge at 137 loads.
  • The $14.49 and $14.84 surge in Choice and Select boxed beef values, respectively, this week has also pulled packer profit margins into the black.
  • Traders in the feeder cattle market are weighing spillover from live cattle and the discount nearby contracts maintain to the cash index against strength in corn.

Lean hog futures are posting slight gains this morning.

  • Spillover from live cattle futures is lifting the lean hog market today. Traders are optimistic the record-setting surge in the beef market will lift pork demand and prices as well.
  • However, the pork cutout value slipped $1.19 yesterday. Movement was impressive, however, at 513.09 loads.
  • But with nearbys at a premium to the cash index, upside potential could be limited.
  • Adequate supplies are expected to keep the cash hog market mostly steady today. Saturday's kill is expected to be down 15,000 head from week-ago.
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