Market Snapshot, 10:00 am CT (VIP) -- February 11, 2013

February 11, 2013 04:04 AM
 

Corn futures improved with the open of pit trading to post slight gains in March and May futures while deferred months are around a penny lower.

  • Friday's Supply & Demand Report reminded traders of disappointing export demand as USDA's carryover estimate of 632 million bu. topped expectations.
  • But this still represents tight supplies, which has encouraged some light short-covering.
  • Strong losses in beans and strength in the U.S. dollar index are making it difficult to find buyers outside of short-covering, however.
  • Weekend rains in South America with more in the near-term forecast for Southern Brazil and in the 6 to 10-day forecast for Argentina is also limiting buying interest.
  • Gulf basis was a penny lower for April delivery this morning, also reminding of poor export demand.

 

Soybean futures have moved off their early lows but most contracts are still posting losses in the teens.

  • Soybean futures continue to see pressure from USDA's decision not to raise its export forecast Friday. This signals it expects China to begin sourcing its needs from South America soon.
  • Meanwhile, South America is still is expected to produce a record-large bean crop. Southern Brazil and Argentina saw favorable rain over the weekend And there's more in the forecast for Brazil this week.
  • Plus, China is celebrating its Lunar New Year this week, which could signal a pullback from recent strong daily bean purchases.
  • Countering this, however, was a 2-cent rise in Gulf basis this morning for immediate delivery.

 

Wheat futures have seen mixed trade this morning, but is currently trading 1 to 3 cents lower.

  • As nearby corn contracts firmed, wheat futures also saw a boost in buying interest.
  • Also making it easier for wheat to find buyers was USDA's 25 million bu. cut to U.S. carryover on Friday, whereas traders had anticipated a 12 million bu. increase to the figure.
  • But negative outside markets and heavy losses in the bean market are giving bears the upper hand.
  • Also, some areas of the Southern Plains are expected to see precip this week.

 

Live cattle futures are slightly to moderately lower in early trade. Feeder cattle futures are posting moderate to sharp losses.

  • Traders are engaging in some followthrough selling today after the boxed beef market softened the latter half of last week, signaling the product market has yet to put in a low.
  • Pressure is being limited by ideas the downside has been overdone, however, as well as expectations beef demand will soon improve seasonally.
  • Cash cattle trade took place at mostly $125 last week, which was steady to slightly lower than the week prior for most locations. Nearby futures remain at a premium to these prices, adding pressure.
  • Traders will wait for showlist estimates and early boxed beef action before forming cash opinions this week. Supplies are tightening, but cutting margins remain buried in the red.
  • Feeder cattle futures are also seeing followthrough selling, encouraged by strength in the U.S. dollar index and the corn market's move into positive territory.

 

Lean hog futures are off to a mixed start with the front month slightly higher and deferred months mostly slightly lower.

  • Early cash hog bids are steady to lower as packers are dealing with negative cutting margins. Some are expected to further trim kill hours to improve margins.
  • The pork cutout value firmed 54 cents Friday, but movement slowed.
  • Selling interest is also being limited by news pork exports for 2012 hit a new record in terms of value and volume, according to U.S. Meat Export Federation analysis of USDA data.
  • Also, the February contract that expires Thursday remains at a steep discount to the cash hog index. The soon-to-be new front-month contract is also well below the cash market.
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