Market Snapshot, 10:00 a.m. CT (VIP) -- February 12, 2014

February 12, 2014 04:17 AM
 

Corn futures are 2 to 3 cents higher on stronger wheat prices.

  • Corn futures have shrugged off lower prices in early trading prompted by spillover weakness from soybean futures and a stronger U.S. dollar index. Futures trimmed early losses as soybean futures have recovered from their early double-digit decline.
  • With little fresh news available, the market is again focusing on prospects for a significant increase in carryover supplies from the 2013 crop and the lingering dampening impact on prices.
  • Traders are encouraged that demand for corn is running ahead of expectations but worry a sharp rise in prices would curtail that demand.
  • Traders are looking ahead to USDA's weekly export sales data due tomorrow. Recent reports have confirmed rising demand. Another week of strong sales would add to trader growing confidence that prices are still at value levels.
  • Gulf corn basis is mixed this morning, with nearby delivery steady to 1 cent firmer. Immediate delivery stands 76 cents over March futures.
  • Futures are gaining light support from news weekly ethanol production rose 7,000 barrels per day (bpd) the week ended Feb. 7 to 902,000 bpd. However, stocks also rose by 323,000 barrels.

 

Soybean futures are 4 to 8 cents lower after opening sharply lower.

  • Soybean futures are lower on news of Chinese sales cancellations, forecasts for precipitation in dry areas of Brazil and a stronger U.S. dollar. But futures have trimmed early double-digit losses.
  • Futures saw double-digit losses on news China has canceled 272,000 MT of U.S. old-crop soybean purchases. Traders believe this is just the start of China's cancellations as more of the record-large Brazilian crop moves to the global market.
  • However, USDA also announced China has purchased 240,000 MT of beans for 2014-15, signaling continuing strong demand from that nation for U.S. soybeans.
  • The forecast for precipitation to arrive sooner than previously expected in southern Brazil later this week is pressuring prices as well.
  • Meanwhile, according to official customs data from China, the country imported 5.91 MMT of soybeans in January. While this is down 20.1% from December, it's still 23.7% more than year-ago.
  • Gulf soybean basis is 2 cents higher for immediate delivery this morning.

 

SRW and HRW futures are 2 to 4 cents higher while HRS is mostly 6 to 8 cents higher.

  • Wheat futures were initially pressured by the stronger U.S. dollar index and weakness in both corn and soybean futures.
  • Futures have moved into positive territory as corn futures firmed and on technical buying as futures moved above last week's highs.
  • The HRW market is finding support from continuing concerns about winterkill and drought in the HRW wheat region.
  • Ongoing transportation problems have limited Japanese purchases of Canadian wheat this winter and are providing support for deferred HRS futures.
  • Gulf SRW basis is 5 to 10 cents higher for nearby delivery to suggest a burst in demand, while Gulf HRW basis slid 3 to 7 cents this morning for nearby delivery.

 

Live cattle futures are slightly stronger in most contracts as traders wait on cash trade. Feeder cattle are favoring the upside in mixed trade.

  • Live cattle futures are slightly higher as traders wait for cash trade to start.
  • Futures are finding light support from the lack of delivery notices posted for the February contract.
  • The massive winter storm sweeping across the south is expected disrupt transportation, providing support for cash cattle trade.
  • However, this week's larger supplies and yesterday's softer tone in the beef market has some traders looking for $1 lower cash trade this week compared to last week's $140 to $142 cash trade.
  • Today's very narrow trade is the result of these two competing views of the cash market.
  • Choice beef values declined $2.02 yesterday and Select dropped 85 cents, but packers moved 166 loads of beef.
  • Nearby feeder futures are slightly higher on spillover from live cattle.

 

Lean hog futures are slightly higher.

  • Lean hog futures are slightly higher on short covering following yesterday's losses and steady cash prices.
  • The lack of followthrough selling this morning after yesterday's losses is also encouraging short-covering.
  • Pork cutout values firmed 13 cents yesterday, but movement failed to impress at 347.73 loads.
  • USDA reports average weights in Iowa and southern Minnesota slipped 0.6 lbs. for the week ending Feb. 8 to 281 lbs. However, that is still 5.3 lbs. heavier than a year earlier.
  • February lean hog futures hold a little more than a $1 premium to the cash index ahead of Friday's expiration, and April hogs, which will soon become the lead-month contract, hold around a $10 premium to the index.
  • Futures are also finding some support on news a new coronavirus has been detected on farms in Ohio.
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