Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 17, 2014

January 17, 2014 04:01 AM

Corn futures are posting losses around 3 to 5 cents in most contracts.

  • Corn futures are posting losses as traders reduce risk ahead of the weekend. Strength in the U.S. dollar index is adding to weakness.
  • Traders remain wary about the possibility of additional Chinese rejections or sales cancellations of U.S. corn or DDGs due to the presence of an unapproved GMO corn variety, since little progress has made little progress toward resolving the issue.
  • The forecast for cooler temps and rain in Argentina next week adds pressure. High temps are expected to move into Brazil, however.
  • Traders are brushing off news China's cereal grain imports for calendar year 2013 totaled 15 MMT, which is up 1 MMT from 2012, according to the head of the country's state grain administration.
  • The market is also ignoring signs of rebuilding corn demand. For one, USDA announced a 204,000-MT corn sale to value-buyer Egypt for 2013-14 this morning.
  • Gulf corn basis is up 5 cents for January and February delivery, while March through May delivery is 1 to 2 cents higher. This signals demand news may lie ahead.

Soybean futures have pared early losses to trade mostly 2 to 4 cents lower.

  • The forecast for cooler temps and precip in Argentina is keeping the bean market under pressure today.
  • This along with dollar strength is causing traders to favor the downside as they ready for the weekend.
  • There is also concern about the announcement of four additional cases of H7N9 bird flu in China, especially with the Chinese Lunar New Year celebration approaching. If a major outbreak occurs, it could slow feed demand.
  • Thus far, however, Chinese imports for U.S. soybeans have remained strong. In fact, the country's ministry of commerce nearly doubled its soybean import forecast for January yesterday.
  • Gulf soybean basis slid 5 cents for immediate delivery and a penny for March delivery this morning. Other months were steady to 3 cents higher.

SRW wheat future are down 6 to 7 cents, while HRW wheat is 2 to 4 cents lower. HRS wheat is posting losses around 4 to 5 cents.

  • Losses in the corn market and gains in the U.S. dollar index are weighing on wheat today.
  • Also, the chart pattern of the market is clearly steady to lower.
  • Recent signs U.S. wheat prices may have finally reached value levels have kept the market from forging new lows in recent sessions. But consistent and strong demand news will be needed to spur active buying interest.
  • While most of the winter wheat crop is exposed to the elements, little in terms of weather threats is on the horizon, although the drought lingers.

Nearby live cattle futures gapped lower on the open, but the market has since backed off its initial levels to post slight losses in most contracts. Feeder cattle futures are slightly to moderately lower.

  • Traders are engaging in some profit-taking ahead of the weekend after some contracts rose to new contract highs this week. Also, traders are working to correct the overbought condition of the market.
  • However, the fundamentals remain fully bullish, which should limit selling to profit-taking. Futures have lagged the cash market, signaling traders believe a top is near.
  • Additional cash cattle trade took place yesterday at record-setting prices. This week, Texas and Kansas have seen cash trade mostly at $142, while Nebraska has seen cash prices ranging from $142 to $144.50.
  • These lofty prices were spurred by the red-hot boxed beef market rally and tight supplies.
  • Showlist estimates are tighter this week, plus frigid temps in recent weeks slowed or stopped weight gain, further tightening supplies.
  • Choice boxed beef values surged another $4.17 to a record $228.79 yesterday and Select rose $3.60 to $225.51. Movement was also decent considering price strength.
  • The record-setting run-up has pulled packer profit margins above $50 compared with more than $100 in the red just last week.
  • Dollar strength and spillover from live cattle are pressuring feeder cattle futures.

Lean hog futures are posting slight to moderate losses this morning.

  • Spillover from live cattle and light profit-taking in the lean hog market are weighing on the hog market to wrap up the week.
  • The February lean hog contract is leading losses as it holds a $6 premium to the cash hog index; the index has declined the past three days.
  • Strength in the U.S. dollar index adds to profit-taking incentive.
  • Pressure on deferred months is being limited by improvement in the product market. The pork cutout value improved $1.39 yesterday and movement was solid at 367.90 loads.
  • Traders believe the record-setting boxed beef rally could help pork put in a seasonal low.
  • Early cash hog bids are mostly steady as packers are generally well supplied on near-term needs and supplies are adequate.
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