Market Snapshot, 10:00 am CT (VIP) -- February 12, 2013

February 12, 2013 04:09 AM
 

After briefly moving into positive territory, corn futures softened. Old-crop contracts are 1 to 6 cents lower, while new-crop contracts are choppy.

  • Nearby contracts' inability to sustain buying above $7.00 led to some additional selling.
  • Plus, USDA's long-term baseline projections for production and carryover to recover in 2013-14 remains on traders' minds even though these figures are little more than for budgetary purposes.
  • Steady Gulf basis levels this morning signal lackluster export demand is not likely to change anytime soon.
  • Friendly outside markets are limiting price pressure.

 

Soybean futures have reversed course to post losses of 3 to 7 cents through the September contract. New-crop contracts are mixed.

  • Early gains in soybeans thanks to ideas the downside was overdone have given way to profit-taking.
  • Pressure stems from ideas Chinese soy buys will slow this week for the Chinese new year celebration. And tapering demand is expected to continue once South American supplies hit the export market.
  • Late-week light showers and cooler temps in the forecast for Argentina as well as rain chances for southern Brazil mean production concerns have faded.
  • Light pressure also stems for 1-cent declines in Gulf basis for April and June delivery this morning. This, too, reminds of slower demand.

 

Wheat futures have softened to trade mostly 4 to 8 cents lower at all three locations.

  • Spillover pressure from beans and corn are weighing on the wheat market.
  • Precip in some areas of the Southern Plains add to the negative tone.
  • Wheat has also seen some technical selling as contracts moved through key levels of support this morning, hitting new yearly lows.
  • ABARES slightly raised its 2012-13 Australian wheat crop estimate to 22.077 MMT, but that's down from last year's record of 29.9 MMT. ABARES left its wheat export forecast unchanged at 20.9 MMT.

 

Live cattle futures are posting slight to moderate losses this morning. Feeder cattle futures are moderately lower.

  • February live cattle remain at a $1-plus premium to the bulk of last week's cash trade, opening the door for profit-taking.
  • Snow in areas of Texas and Oklahoma are raising concerns both about transporting animals and about stress to livestock.
  • This along with tighter showlist estimates this week have led to early expectations for steady to slightly higher cash cattle prices this week.
  • But a highly unimpressive start to boxed beef trade yesterday add a fair amount of uncertainty. Prices were mixed, but movement slowed notably.
  • Considering negative packer margins, ongoing weakness in the boxed beef market could certainly put a damper on the cash market if this continues.
  • Recent major chart damage is weighing on feeder cattle futures, though the market is technically oversold.

 

Lean hog futures are off to a mixed start with the February contract slightly higher and deferred months under pressure.

  • The front-month contract that expires Thursday is benefiting from the around $3 discount it holds to the cash hog index with just two days remaining until expiration.
  • Concerns about the product market and thus the cash market are weighing on deferred contracts, however.
  • The pork cutout value fell 52 cents Monday and movement was unimpressive, keeping packer profit margins buried in the red.
  • Thus, cash hog bids are steady to lower today amid limited demand.
  • There is also some concern about the impacts of Russia's import ban on U.S. meat which began yesterday.
     
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