Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 23, 2014

January 23, 2014 04:02 AM
 

 

Corn futures are posting gains of 1 to 3 cents this morning.

  • Sharp weakness in the U.S. dollar index is encouraging short-covering.
  • Gains in the soybean and wheat markets are adding spillover support.
  • While Argentina has benefited from milder temps and precip this week, more dry conditions with above-normal temps are expected next week. Southern Brazil is also dealing with stressful conditions, though showers are expected this weekend for the region.
  • Weekly ethanol production data will be released at 10:00 a.m. CT.
  • Gulf basis is steady this morning, as has been the case much of the week.

Soybean futures are 5 to 6 cents higher through the July contract; deferreds are posting lighter gains.

  • Major losses in the U.S. dollar index are encouraging corrective short-covering in the bean market. Traders view recent losses as overdone.
  • Traders are brushing off news China's manufacturing sector contracted for the first time in six months, as the country has remained a strong buyer of U.S. soybeans.
  • Also limiting buying interest to short-covering are lingering concerns that the country will cancel some of its U.S. soybean orders when South American supplies come available.
  • Nearby contracts have yet to test resistance at the psychological $13.00 level.
  • Gulf soybean basis is steady this morning.

Wheat futures have extended early gains to trade 10 to 12 cents higher in the SRW and HRS markets, while HRW is up 10 to 14 cents.

  • Wheat futures are benefiting from some signs of improving demand as well as weather concerns.
  • Sharp dollar weakness adds support, too, as it makes U.S. wheat exports more attractive.
  • Severe cold in some areas of the U.S. is raising concern about winterkill in areas where snowcover is lacking, such as parts of Nebraska, Illinois and northeast Missouri.
  • Taiwan and Japan bought U.S. wheat overnight, adding to ideas prices may finally be competitive.
  • Traders will receive an update on weekly exports tomorrow at 7:30 a.m. CT.

Live cattle futures are posting moderate losses this morning. Feeder cattle futures are also moderately lower in most contracts.

  • Live cattle futures are seeing a sell-the-fact reaction to another week of record-high cash cattle trade. Traders are also booking profits after yesterday's strong gains.
  • Cash cattle trade got underway at mostly $147 in Kansas and Texas yesterday, which was up $5 from last week's trade. Nebraska saw trade at a record $150.
  • But today's losses signal traders are uneasy about lofty prices in both the cash and product market. February futures are nearly $4 below the lower end of this week's cash trade.
  • Spurring gains in the cash market was a red-hot rally in the beef market. Choice cuts rose 33 cents yesterday and Select firmed 29 cents. Movement picked up to 128 loads, as these price gains were milder than the $2 to $4 daily gains the market has seen of late.
  • Pressure also stems from yesterday's Cold Storage Report that showed frozen beef stocks at the end of December at 438.123 million lbs., which was roughly 13.3 million lbs. more than traders expected. However, this was still 27.6 million lbs. below year-ago.
  • Traders are also reducing risk ahead of tomorrow's Cattle on Feed Report, which is expected to show ongoing supply tightening.
  • Severe cold is stressing cattle this week, also helping to keep supplies snug.
  • Strength in the corn market is weighing on feeder cattle futures.

Lean hog futures are posting slight losses this morning.

  • A bearish Cold Storage Report is pressuring the market this morning, as is spillover from the cattle markets.
  • Frozen pork stocks at the end of December came in at 557.130 million lbs., which was about 8.9 million lbs. more than traders expected. This was up 5.6 million lbs. from year-ago and 10.9 million lbs. above the month prior.
  • In addition, the pork cutout value continued its slide yesterday, dipping 11 cents. This did encourage strong movement of 458.74 loads, however.
  • On the other hand, pressure is being limited by extreme cold and icy roads in the Midwest, which has halted or slowed transportation of market-ready hogs. Therefore, bids are steady to higher this morning.
  • Some small packing plants in the eastern Corn Belt closed their doors Wednesday due to frigid temps. Thus, Saturday's kill is expected to be up 5,000 to 10,000 head from week-ago as plants look to make up for downtime this week and since the start of the year.
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