Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 24, 2014

January 24, 2014 04:03 AM

Corn futures are still 2 to 3 cents lower this morning.

  • Light profit-taking is underway ahead of the weekend as traders weigh export demand news against concerns about the future of exports.
  • Weekly corn export sales of 693,000 MT for 2013-14 topped expectations. Also of note, Egypt, a value buyer, was the top buyer.
  • USDA also announced the following three daily corn sales for 2013-14 delivery: 150,000 MT sold to Spain, 120,000 MT sold to Egypt and 100,000 MT sold to Japan.
  • A 4- to 8-cent surge in Gulf corn basis for January through May delivery signals more demand news may be ahead.
  • But the market is paying more attention to China's plans to expand its grain production by 50 MMT by 2020 through increasing acreage and seed technology in an effort to become self-sufficient.
  • News grain industry groups have asked Syngenta to suspend commercial use of its Viptera corn seed in the U.S. until China grants regulatory approval of the variety keeps the country's cancellations of U.S. corn buys in focus.

Soybean futures are 3 to 7 cents lower this morning.

  • Ideas the sharp devaluation of the Argentine peso will encourage farmers there to sell old-crop beans they have been sitting on as a hedge against inflation are pressuring the bean market.
  • Also, recent and expected showers in South America have eased crop concerns in the region for the time being.
  • A private consultancy in Brazil today said it expects the country's 2013-14 soybean production to total 91.8 MMT, which is above Conab's latest forecast.
  • South American news is overshadowing more signs of strong demand for U.S. soybeans.
  • Weekly soybean export sales of 703,400 MT for 2013-14 and 969,800 MT for 2014-15 came in nearly 2.7 times the top end of expectations. China was the lead buyer. Exports of nearly 1.583 MMT were also impressive and mildly above the four-week average.
  • USDA also announced a daily soybean sale of 126,000 MT to China for 2014-15.
  • Gulf soybean basis jumped 4 cents for May delivery while other months held steady this morning.

SRW wheat futures are down 5 to 6 cents, while HRW and HRS wheat are posting losses mostly between 2 to 5 cents.

  • Traders were disappointed by today's weekly export sales data. While wheat sales of 421,400 MT for 2013-14 and a net sales reduction of 8,000 MT for 2014-15 met expectations, the tally was far from impressive. Also, exports of 420,700 MT were down 28% from the previous week.
  • Recent overnight sales activity had some hopeful that U.S. prices had finally attracted strong demand for U.S. wheat. This sort of news will be needed for wheat to put in a bottom as the market has exhibited limited response to weather concerns.
  • Much of the winter wheat crop is exposed, which means two cold blasts forecast for next week could cause winterkill.
  • Spillover from the corn and soybean markets add pressure.
  • HRW wheat basis at the Gulf softened 1 to 4 cents this morning, adding pressure. SRW wheat Gulf basis held steady across the board.

Live and feeder cattle futures are slightly to moderately lower in early trade.

  • Traders are favoring the downside as they exit for the weekend or prepare the Cattle on Feed Report.
  • Pre-report expectations are for On Feed to come in at 94.0% of year-ago, Placements at 98.1% and Marketings at 102.2% of year-ago levels. Placements are the wildcard as there is nearly an 11-percentage-point spread in the range of estimates.
  • The first drop in the boxed beef market in three weeks yesterday adds to uncertainty about whether the highly impressive rally has run its course, warranting a correction in the cash and futures markets. Choice boxed beef cuts slid $1.50 while Select fell 51 cents.
  • But ahead of this decline, cash cattle trade took place at mostly $147 on the Southern Plains and at $150 in Nebraska. Nearby futures remain at the $3-plus discount to the lower end of these prices.
  • Traders are taking advantage of the recent rally in feeder cattle futures by booking profits today. The front month is in line with the cash index.

Lean hog futures gapped higher on the open and are posting slight to moderate gains with nearbys leading to the upside.

  • Lean hog futures are benefiting from gains in the cash hog and product markets to wrap up the week.
  • Recent frigid temps and icy/snow-covered roads have slowed hog transportation and give packers incentive to raise bids. The cash hog index has ticked up the past two days, though it remains well below the front-month contract.
  • Packers are planning a large Saturday kill as plants work to make up for weather and holiday-related downtime since the start of the year.
  • Also encouraging is a 91-cent gain in the pork cutout value yesterday and decent movement of 355.22 loads.
  • Pork export sales for the week ended Jan. 16 of 14,700 MT represent a strong gain compared to last week's 9,900 MT in sales. Exports were also solid at 12,600 MT.
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