Market Snapshot, 10:00 am CT (VIP) -- February 14, 2013

February 14, 2013 04:07 AM
 

Corn futures have mildly extended losses to trade 2 to 5 cents lower.

  • After a mixed close yesterday, corn futures are facing renewed selling today, thanks in part to marked strength in the U.S. dollar index due to a larger-than-expected slide in the European Union's GDP.
  • This morning's weekly export sales data is helping to limit pressure on corn as sales of 225,400 MT for 2012-13 and 59,300 MT for 2013-14 were within expectations and an improvement over last week.
  • Also, Gulf basis levels firmed 5 cents for immediate and April delivery, while other months were steady to 2 cents higher. This signals some value buying may be surfacing.
  • But considering an extended period of weak export demand, much more will be needed to convince the market export demand is improving.
  • Meanwhile, South America is expected to produce a large corn crop and recent export buys from Asian nations have favored Argentina.

 

Soybean futures have pared losses slightly to trade mostly 9 to 15 cents lower.

  • A net reduction in soybean export sales of 109,200 MT for 2012-13 and a relatively light sales tally for 2013-14 of 345,000 MT is encouraging selling. This was well below expectations for sales of 700,000 MT to 1.1 MMT.
  • Sales of soy products also fell short of expectations. Soyoil sales of 16,600 MT and soymeal sales of 132,400 MT fell short of expectations.
  • This confirms what traders have been fearing. Soybean demand will likely slow notably as South American supplies come available, and this may even include order cancellations.
  • China canceled 230,600 MT of beans sales for 2012-13 the week ended Feb. 7.
  • Dollar strength is also encouraging selling in the bean market today.
  • Softer Gulf basis for immediate delivery also points to slower demand.

 

Wheat futures softened with the start of pit trading to trade mostly 8 to 9 cents lower in Chicago and Kansas City while Minneapolis is mostly 7 to 8 cents lower.

  • Earlier this morning, wheat futures benefited from this morning's Weekly Export Sales Report, which showed sales of 651,700 MT for 2012-13 and sales of 54,600 MT for 2013-14. This topped expectations and may signal U.S. wheat prices have dipped to levels that render it competitive globally.
  • But considering this has been a long time coming, more will be needed to convince market participants. Thus, traders are using sharp gains in the U.S. dollar index as a reason to sell.
  • Rain in the forecast next week for winter wheat county is also adding pressure.
  • News Strategie Grains lowered its 2013 EU (including Croatia) wheat production forecast by 1.1 MMT to 132.2 MMT due to lower planted acreage in Britain and France is not strong enough to provide support.

 

Live cattle futures gapped lower on the open and are posting moderate to sharp losses. Feeder cattle futures are sharply lower.

  • Traders are concerned about a possible halt to meat exports as USDA has indicated that meat inspectors may be furloughed March 1 if lawmakers don't reach an agreement on the across-the-board spending cuts slated to occur at the start of the month.
  • This, in turn, is limiting demand for feeder cattle.
  • Live cattle broke through long-term levels of support this morning, triggering additional technical selling and in some cases, opening up downside risk to contract lows.
  • So far, just light cash cattle trade has taken place at $123 earlier this week. Heavy pressure on futures could make it difficult for feedlots to get higher prices, despite recent improvement in the boxed beef market.
  • Yesterday, Choice boxed beef values rose 23 cents while Select cuts firmed 2 cents. This did not curb movement; 215 loads changed hands.
  • But somewhat offsetting this is the recent slide in weekly boxed beef exports. Export sales totaled just 7,300 MT for the week ended Feb. 7.

 

February lean hog futures are enjoying slight gains, while the rest of the market is moderately to sharply lower.

  • The February lean hog contract expires at noon CT today. Thus, traders are working to bring it in line with the cash hog index, which was most recently projected at $88.96.
  • But the rest of the market is being pressured by a $2.68 plunge in the pork cutout value yesterday. This signals the product market is still searching for a low.
  • The decline in pork prices also pulled packer profit margins deeper into the red. They had been improving of late, though they were still in negative territory.
  • Due to sliding margins, packers are paying steady to lower prices for market-ready hogs this morning.
  • Also limiting demand, a few plants will be closed Monday for President's Day.
     
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