Market Snapshot, 10:00 am CT (VIP) -- February 13, 2013

February 13, 2013 04:07 AM
 

Corn futures improved marginally with the open of pit trading. Old-crop futures are fractionally to 3 cents lower while new-crop contracts are mixed.

  • Rain in Brazil and Argentina yesterday and rain chances for Argentina tonight are weighing on old-crop corn futures as this improves South American production prospects.
  • Also, U.S. production prospects are beginning to gain more attention after USDA and the Congressional Budget Office recently released their long-term baseline projections showing a rebound in U.S. corn production for 2013-14. Traders are paying attention to these projections even though they are for budgetary purposes.
  • Corn futures are also seeing technical selling after the market's sub-$7.00 close yesterday. Countering this, however, is some short-covering as the market is technically oversold.
  • Weak export demand for U.S. corn remains a limiting factor for buyers. Gulf basis did rise 2 cents for May and June delivery this morning, however.
  • Weekly ethanol production of 789,000 barrels per day represents a 1.9% improvement over the week prior -- also encouraging some light short-covering.

 

Soybean futures have further pared early losses to trade mostly 1 to 4 cents lower.

  • Recent rains in South America remind traders of the record-large crop expected for the region, which will likely hit the export market soon.
  • This, along with recent technical damage, is encouraging followthrough selling today.
  • Plus, frequent daily sales announcements to China have been absent this week as the country is celebrating its Lunar New Year. China will likely fade as a major buyer of U.S. bean soon as South American supplies come available.
  • Gulf basis slid 2 cents for March delivery this morning, signaling fresh export demand news is not likely ahead.
  • Recent projections for U.S. production and carryover to recover in 2013-14 and for lower cash prices have also been a weight on the market this week.

 

Wheat futures rebounded with the open of pit trading to post slight gains in most contracts at all three locations.

  • Wheat futures are benefiting from ideas the downside is overdone as futures hit new eight-month lows yesterday. Improvement in the corn and soybean markets with the start of pit trading is also encouraging to that end.
  • Plus, the five-day outlook for the Central and Southern Plains is dry, though there are precip chances thereafter.
  • But to encourage active buying in the wheat market, solid signs export demand is improving are needed. Traders will watch tomorrow's Weekly Export Sales Report for any sign of improvement after the recent price break.
  • News FranceAgriMer raised its forecast of 2012-13 soft wheat stocks estimate slightly to 2.42 MMT is countered by news of a reduction to its French wheat exports estimate within the EU. The firm left its exports estimate outside of the bloc unchanged at 10 MMT.

 

Live cattle futures are posting slight losses this morning. Feeder cattle futures are mostly sharply lower.

  • Light cash cattle trade took place in Kansas, Texas and Nebraska at mostly $123 yesterday. This is down $2 from the bulk of trade last week and roughly $2.50 below nearby futures prices.
  • Selling pressure is being limited, however, by improvement in the boxed beef market yesterday. Choice cuts rose 73 cents and Select firmed 15 cents, but movement needs to improve to signal better retailer buying.
  • But considering deeply negative packer cutting margins and the extended slide in boxed beef values, more gains will be needed to give traders confidence the product market has put in a low.
  • Feeder cattle producers are also dealing with deeply negative margins due to high feed costs. This along with technical-based selling is weighing on feeder cattle futures.

 

Lean hog futures are off to a narrowly mixed start this morning.

  • February lean hogs are benefiting from the $2-plus discount the contract holds to the cash index. The contract expires tomorrow at noon CT.
  • Concerns about the product market continue to weigh on the lean hog futures.
  • Yesterday, the pork cutout value rose 93 cents and movement was strong, but the increase was entirely due to a $6.10 gain in hams.
  • Considering recent steady declines and the fact that packers have long been cutting in the red, much more improvement will be needed to boost interest in the long side of the market.
  • Cash hog bids are steady to lower this morning as packers work to improve margins.
     
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