Market Snapshot, 10:00 am CT (VIP) -- February 26, 2013

February 26, 2013 04:15 AM
 

Corn futures have firmed to post gains of 3 to 9 cents, with old-crop contracts leading gains.

  • Corn futures are benefiting from short-covering amid ideas the downside has been overdone. There is also some talk of a potential pickup in demand.
  • Strong basis levels around the country remind traders of very tight carryover supplies. Plus, Gulf basis levels rose 1 to 5 cents for March through June delivery this morning, signaling some more export demand news may now be on the horizon.
  • Outside markets are a mixed bag, with the U.S. dollar index firmer and the stock market firmer. The Italian elections have brought the euro-zone back into focus and the looming sequester in the U.S. is cause for concern.

 

Soybean futures have improved to mixed trade with old-crop contracts mostly firmer and new-crop contracts mildly favoring the downside.

  • Gains in the corn market have encouraged some short-covering in soybean futures.
  • But otherwise, buying interest is limited as South American supplies will soon hit the global export market, easing demand for U.S. beans.
  • Gulf basis slid 3 to 6 cents this morning for February and March delivery, respectively. And yesterday's export inspections report was disappointing.
  • Plus, concerns about Brazilian shipping delays have faded for the time being as Brazilian port workers have pledged to not strike through March 15.
  • The winter storm event moving into the Corn Belt this morning is also limiting buying interest. Plus, the latest Palmer Drought Index reflects improvement to the drought across the western Corn Belt, though much more is needed.

 

Wheat futures at all three locations have improved to post slight gains.

  • Wheat futures are benefiting from spillover support from corn.
  • Also, news Russia may extend the duty-free period for grain imports by a month to Aug. 1 is adding light support.
  • And the Russia winter grain crop is in worse shape than normal according to the head of the Russian Grain Union, as 2 million hectares have been destroyed by winterkill. This is 12.6% of the sown area, which compares to 8% on average.
  • But state crop and weather reports reflect soil moisture improvements across most of the HRW Wheat Belt, and a winter storm event yesterday dumped near-record to record snowfall on areas of the Central and Southern Plains, further improving moisture conditions.

 

Live cattle futures are mixed with nearby contracts slightly higher and deferred months mostly lower. Feeder cattle futures are under light pressure.

  • The winter storm event has resulted in an unknown showlist for Texas this week, while showlist estimates in all other locations are down slightly from last week.
  • The transportation disruptions and stress to cattle as a result of the recent winter storm could give feedlots an edge in this week's negotiations.
  • But the boxed beef market got off to a lackluster start yesterday, with Choice cuts up 20 cents and Select values down 5 cents. Movement was also unimpressive at 163 loads.
  • Traders in the livestock markets are also watching outside market developments. Concerns that lawmakers will not reach a deal before across-the-board spending cuts go into effect this Friday raise worries about meat demand and the fate of meat inspectors.
  • Strength in the corn market is again weighing on feeder cattle futures.

 

Lean hog futures are enjoying slight to modest gains this morning.

  • While packers are now working with solidly positive profit margins, plants are nevertheless paying steady to lower prices for hogs as most are well supplied for the week.
  • Plus, a few plants have trimmed slaughter rates due to the winter storm event.
  • And while the pork cutout value rose 15 cents yesterday, movement was highly unimpressive at 21.63 loads.
  • But the oversold condition of the market has encouraged corrective short-covering this morning.
     
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