Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 28, 2014

January 28, 2014 04:06 AM

Corn futures faced pressure overnight and early this morning, but March and May futures have improved to post marginal gains, while deferreds are fractionally lower.

  • Bull spreading activity is lifting nearby contracts and pressuring deferreds.
  • Light support for old-crop futures stems from news Spain bought 110,000 MT of corn for 2013-14 delivery.
  • Also, Gulf corn basis is steady to a penny higher this morning, following a similar rise yesterday. This signals more demand news may lie ahead.
  • Nevertheless, ample U.S. stocks and spillover pressure from the soybean market is limiting buying interest in the corn market.

Soybean futures are split with old-crop futures 2 to 5 cents lower and new-crop 2 to 3 cents higher.

  • Traders in the soybean market are unwinding bull spreads today.
  • Nearbys are also being pressured by ongoing concerns that China will cancel U.S. soybean orders in the near futures as a record-large Brazilian crop comes to market.
  • Expectations are for record-large shipments out of Brazil in February.
  • Adding to concerns, Gulf basis slipped 5 cents for immediate delivery this morning.
  • Also, news Hong Kong has suspended live poultry imports from mainland China for two days due to the finding of H7N9 bird flu keeps concerns about reduced feed demand close at hand.

SRW wheat futures are around 4 cents higher while HRW wheat is up 2 cents. HRS wheat is mixed, with an upside bias.

  • Winterkill concerns are providing light support for the winter wheat market this morning.
  • Temps are at sub-zero levels as far south as Nebraska and cold conditions persist all the day down to the southern Plains. Snow is falling in the Central and Southern Plains. USDA says this is the third time the crop has been subjected to a cold snap this year.
  • But concern is being tempered by the fact traders will not receive an update on the winter wheat crop condition until April, although weekly data from Texas reflects that crop saw another drop in its condition ratings last week.
  • Support also comes from news Egypt, a value buyer, bought 60,000 MT of U.S. SRW wheat today. The country also purchased 180,000 MT of Russian wheat.
  • Gulf basis for SRW wheat jumped 1 to 5 cents for April through June delivery this morning, possibly signaling some value buying is underway or that some are preparing for any "surprises" regarding the condition of the winter wheat crop when it exits dormancy.

Live and feeder cattle futures got off to a mixed start, but the markets have since softened to post slight losses in most contracts.

  • Uncertainty as to near-term price direction is pressuring the cattle market this morning.
  • While showlist estimates are up this week, bitter cold on the Plains and Midwest is slowing or halting cattle weight gain.
  • Also, after slipping at the end of last week, Choice cuts firmed 78 cents yesterday to $238.04 per cwt. and Select jumped 81 cents to $237.06 per hundredweight. But movement was notably light at 79 loads.
  • Around 750 head of cattle traded at $146 in Texas yesterday, but active trade is not expected until late-week.
  • Traders are showing no urgency to narrow the $4-plus discount February live cattle hold to last week's $147 cash trade on the Southern Plains, signaling they do not expect cash market strength to last. However, this was also the case in recent weeks when the cash market surged.
  • Feeder cattle futures continue to face pressure stemming from Friday's bearish calf inventory data.

Nearby lean hogs are slightly to moderately lower, while deferred contracts are narrowly mixed.

  • Lean hog futures are facing light profit-taking after yesterday's high-range close in most contracts.
  • While frigid temps in the Midwest are making many producers unwilling to transport hogs, this is also leading to yet another week of reduced kill hours.
  • Total hog slaughter for 2014 through Jan. 11 is down 3.1 percentage points from year-ago.
  • Packers are enjoying strong profit margins, which also makes them more willing to offer steady to higher cash hog bids today.
  • Boosting these margins, the pork cutout value jumped $1.50 yesterday, though movement was light at 274.59 loads.
  • Traders continue to expect record-high beef prices to boost demand for pork once retailers begin passing these prices along to consumers in February.
  • Light pressure also stems from the $4 premium the February contract holds to the cash hog index with the calendar flip to February lying at week's end.
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