Market Snapshot, 10:00 am CT (VIP) -- February 21, 2013

February 21, 2013 04:08 AM

Corn futures have extended early losses to trade 5 to 8 cents lower.

  • Much of this morning's pressure is in response to government projections of a sharp rebound in crop production. This morning USDA Chief Economist Joseph Glauber at the USDA Agricultural Outlook Forum said farmers are likely to produce a record 14.53 billion bu. of corn this year.
  • Glauber also projected 2013 planted corn acres at 96.5 million, which if realized, would be lower than the 97.2 million planted in 2012.
  • Strength in the U.S. dollar index on indications from the FOMC that the Fed could begin backing off from its quantitative easing actions is adding to pressure.
  • This morning the Climate Prediction Center updated its Seasonal Drought Outlook, in which is reveals the potential for drought improvement across the central Corn Belt, although drought is expected to persist from Nebraska southward.
  • The International Grain Council (IGC) raised its 2012-13 global corn carryover projection by 1 MMT to 114 MMT, although this is still below 131 MMT last season.


Soybean futures have improved to mixed trade, with nearby contracts higher. July beans are pivoting around unchanged, with the rest of the market 2 to 6 cents lower.

  • Nearby soybean futures have firmed on the potential for the U.S. export window to remain open a bit longer than usual due to the late start of harvest in Mato Grosso and the potential for lengthy docker worker strikes in Brazil due to the privatization of its ports.
  • Also, USDA announced a 130,450 MT soybean sale to an unknown destination, with 75,450 MT for 2012-13 and 55,000 MT for 2013-14.
  • New-crop futures, however, are being pressured by Glauber's outlook this morning, in which he projected a 2013 U.S. soybean crop of 3.405 billion bushels.
  • Glauber projected planted soybean acres in 2013 at 77.5 million, which if realized, would be up just marginally from 77.2 million in 2012.
  • The IGC trimmed its global soybean carryover projection by 1 MMT to 28 MMT, although this is up from 23 MMT last season.


Wheat futures have extended losses to trade mostly 8 to 12 cents lower in Chicago and Kansas City, with slightly lighter losses seen in Minneapolis.

  • Wheat is seeing spillover pressure from corn, as well as from sharply negative outside markets. Strength in the dollar index is weighing on crude oil futures.
  • This morning's USDA's announcement of an 110,000 MT export sale of soft red winter wheat for delivery to unknown destinations is a positive demand development, but is being ignored by the market. Of the total 55,000 MT is for 2012-13 and 55,000 MT is for 2013-14.
  • USDA's Glauber projects 2013 planted wheat acreage at 56 million, which if realized would be up just slightly from 55.7 million in 2012.
  • This morning's Seasonal Drought Outlook reveals little hope of drought improvement across the Southern Plains this spring. But recent precip through the region has temporarily eased HRW crop concerns.
  • Also this morning, the IGC raised its 2012-13 global wheat carryover projection by 4 MMT to 326 MMT, although this is still 40 MMT lower than last season.


Live and feeder cattle futures are favoring a firmer tone in mixed trade due to short-covering.

  • Ideas recent losses were overdone is encouraging some short-covering this morning, although negative outside markets and concerns about demand are limiting buying.
  • On top of dollar strength, the U.S. stock market is weaker this morning to result in "risk-off" trading atmosphere in the investment world.
  • However, upside potential will be limited by demand concerns. Traders are concerned about possible meat inspector furloughs and slowed export demand.
  • Also, February live cattle are trading at a premium to this week's $123 cash cattle trade, which is also limiting buying.
  • While boxed beef prices have been choppy this week, movement has improved. Still, traders remain concerned about near-term demand prospects due to concerns meat inspectors face a possible furlough.


Lean hog futures are slightly to moderately lower as traders remain concerned about near-term demand prospects.

  • Although futures are severely oversold according to the 9-day Relative Strength Index, lean hog futures are weaker this morning amid demand concerns.
  • News yesterday that China is considering testing U.S. pork for ractopamine raised concerns about export demand, as China is a top customer of U.S. pork.
  • Additional weakness comes from ongoing pressure in the cash hog market. Packers are finally enjoying positive profit margins, but to maintain improved margins, the cash market is steady to weaker again this morning.
  • April lean hog futures are trading at around a $3 discount to the cash index, which signals traders still maintain a bearish attitude toward the market.
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