Market Snapshot, 10:00 a.m. CT -- (VIP) -- January 3, 2013

January 3, 2014 04:02 AM

Corn futures are posting fractional 1- to 2-cent losses in most contracts.

  • The corn market has chopped on either side of unchanged this morning.
  • Overnight the corn market enjoyed light short-covering on a weaker U.S. dollar index. The greenback has since strengthened, however, encouraging additional sales.
  • Recent rains and more moderate temps in Argentina have eased dryness concerns for the time being.
  • Weak export sales of 154,500 MT for 2013-14 and 20,300 MT for 2014-15 fell short of already low expectations. However, a slowdown over the holidays is typical.
  • Steady Gulf basis means export demand news is not likely on the horizon.

Soybean futures continue to enjoy gains around 2 to 4 cents through the August contract, with deferreds seeing slightly lighter gains.

  • Soybean futures are enjoying some corrective short-covering amid ideas the downside was overdone yesterday. The front-month remains below the key $13.00 mark, however.
  • The market is also benefiting from yet another Weekly Export Sales Report that topped expectations with total sales in excess of 1 MMT. USDA reports weekly sales of 943,400 MT for 2013-14 and 237,500 MT for 2014-15, with China as the lead buyer.
  • Reports of favorable early harvest results in Brazil are having little impact as this was expected. There is still uncertainty about whether the country's infrastructure will be able to get a record-large crop shipped in a timely fashion.

Wheat futures are off to a narrowly mixed start across all three flavors.

  • Wheat futures have seen two-sided trade this morning as traders weigh lackluster demand against winterkill concerns.
  • This morning's Weekly Export Sales Report reminded of tepid demand for U.S. wheat. Export sales of 248,500 MT for 2013-14 and 8,000 MT for 2014-15 fell short of expectations.
  • Traders are also waiting on results from Egypt's wheat tender issued for an unspecified amount. But Egypt has only purchased EU or Black Sea-region wheat since July.
  • But there are some concerns about winterkill. A brief warm-up across the Plains is concerning since this is expected to be replaced by temperatures 20°F to 40°F below normal and snow as far south as the northern Delta.

The front-month contract gapped higher on the open and all contracts are enjoying slight gains. Feeder cattle futures are slightly to moderately higher.

  • The cattle markets are benefiting from record-setting cash cattle trade at mostly $137 in Kansas and Texas yesterday. Trade in Nebraska took place from $138 to $139. Futures are at a slight discount to the bulk of trade on the Southern Plains.
  • Gains were spurred by strong gains in the boxed beef market this week and unfavorable weather in northern locations. Plus, supplies are expected to tighten further in the weeks and months ahead.
  • Yesterday the boxed beef market pulled back, however. Choice cuts slid 10 cents and Select softened 36 cents; Just 98 loads changed hands, despite lower prices. This is tempering buying interest in futures this morning.
  • Weakness in the U.S. dollar index and corn market are adding support to feeder cattle futures.
  • Weekly beef export sales of $2,500 MT for 2013 and 9,200 MT for 2014 were down slightly from the week prior. But the tally was decent considering it was for the week of Christmas.

Lean hog futures are narrowly mixed this morning.

  • Buying and selling interest are limited in the lean hog market to wrap up the week amid uncertainty about near-term direction for futures.
  • On one hand, the front-month contract remains at a $7-plus premium to the February contract. Also, dollar strength is encouraging some to book profits after yesterday's strong rally.
  • On the other hand, the cash market has given some signals a low may be in place. Back-to-back weeks of frigid temps have notably slowed hog movement. And with packers enjoying strong profit margins and coming off of consecutive holiday weeks, demand is high. Thus, early cash hog bids are higher.
  • Also, the porcine epidemic diarrhea virus (PEDV) means supplies are tighter than many anticipated.
  • The pork market has been choppy this week. Yesterday, the pork cutout value softened by 16 cents and movement was decent at 351.39 loads.
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