Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 21, 2014

January 21, 2014 03:54 AM

Corn futures are trading 2 to 3 cents lower on spillover from soybeans.

  • Corn futures are lower on spillover from soybeans, gains in the U.S. dollar index and cooler temperatures and precipitation in Argentina.
  • Technically oriented traders are favoring the negative side as futures failed to post followthrough gains last week after the large Jan. 10 key reversal.
  • Traders are reacting to news of forecasts for rain and cooler temperatures for Argentina this week even though they are too late to do little more than stabilize the bulk of the nation's corn crop.
  • Traders view recent news from China as negative. Chinese officials say they will continue to stockpile corn but focuses are on increasing domestic production.
  • Additionally, traders are discouraged about the lingering delays in China's approval process for unapproved GMO corn varieties that have led to canceled shipments.
  • Traders are awaiting the release of weekly export inspections from USDA this morning but there is uncertainty over whether or not that data will be released due to the snow storm predicted for Washington, DC.
  • Gulf corn basis is steady this morning to stand 72 cents over March futures for immediate delivery.

Soybean futures are 12 to 30 cents lower on improved Argentine weather, with nearby futures leading declines.

  • Soybean futures are sharply lower in the front months due to improved weather prospects for the Argentine crop and a slightly stronger U.S. dollar index.
  • Forecasts for favorable rains and cooler temps to move across Argentine this week has traders sharply negative to start the week.
  • Adding to price weakness is news another 23 human cases of H7N9 bird flu were reported in China. While the number of cases is on the rise, the government has not recommended travel restrictions ahead of the upcoming Lunar New Year celebrations.
  • The Chinese government announced it will end its stockpiling program for soybeans in 2014 in favor on direct subsidies to farmers, as expected. But the country will still rely on imports to fill much of its soybean demand.
  • Soybean bulls are looking for positive news from today's weekly export inspections report. However, there is some question about whether or not that data will be released as Washington, DC, prepares for a winter storm, leading to some agencies closing their doors.
  • Gulf soybean basis is steady this morning to stand $1.20 over March futures for immediate delivery.

Wheat futures are favoring a firmer tone in mixed trade. Nearby contracts are 1 to 3 cents higher.

  • Futures are favoring a firmer tone despite strength in the dollar index.
  • The ability of the wheat market to ignore sharp pressure in the soybean pit signals traders view prices have fallen far enough -- for now.
  • In addition, spread unwinding versus corn and soybeans is also providing some lift to wheat futures this morning.
  • But slight strength in the U.S. dollar index, which hit a nine-week high early today, is limiting gains.
  • The chart picture for the dollar is clearly bullish, which has raises trader concerns about the competitiveness of U.S. wheat on the global market.
  • Gulf SRW and HRW wheat basis is steady this morning.

Live cattle futures are slightly to moderately higher on ongoing strength in the beef market.

  • Live cattle futures are firmer due to gains in the wholesale beef market.
  • Choice beef values posted sharp gains yesterday, rising to a record $236.56 per cwt.; Select rose to a record $234.45. Movement was light at 99 loads.
  • Traders will continue to watch the beef market early this week for signs of retailer resistance. Packers are cutting in the black. Some packers paid up to $144 for supplies last week. The bulk of cattle moved at $142.
  • Live cattle are severely overbought according to the 9-day Relative Strength Index, which signals a time or price correction is due. February futures probed through last week's high at $141.00 and are looking for followthrough buying.
  • The strength in cattle futures and weakness in the corn market are boosting feeder cattle futures this morning.

Lean hog futures are mixed, with spring contracts firmer on spillover from live cattle futures.

  • Lean hog futures are generally higher on spillover strength from live cattle futures as well as support from winter weather.
  • Hog markets are expected to be tighter today due to a winter storm that moved across the Midwest yesterday and overnight, which resulted in dangerous wind chills and icy roads. Cash hogs are called steady to higher as a result..
  • Additionally, some packers are short bought on slaughter needs, which is adding to improved demand for cash hogs.
  • Pork cutout values firmed 33 cents on Monday, but movement slowed to 276.31 loads. Traders will be keeping a close eye on the pork market this week as it has benefited recently from the record-setting rise in the beef market.
  • February futures are slightly weaker due to their wide premium to the cash index, which is also slightly weaker.
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