Corn futures are trading narrowly mixed this morning.
- Corn futures faced mild profit-taking overnight, but signs the recent price rise has not yet slowed demand for U.S. corn is giving traders confidence to push prices higher.
- Also, technical traders are encouraged by the market's ability to turn the $4.50 level in March futures and $4.60 in May futures into support.
- Spillover from soybeans is also supportive, though this is countered by gains in the U.S. dollar index and losses in the wheat pits.
- Taiwan bought 60,000 MT of U.S. corn overnight and USDA announced a daily sale of 101,600 MT of U.S. corn to unknown destinations for 2013-14 delivery.
- Gulf basis held steady for immediate delivery but firmed 1 to 3 cents for March through July delivery, signaling more demand news may lie ahead.
- Traders are also encouraged by signs of demand strength at home. Ethanol production for the week ended Feb. 21 rose 2,000 barrels per day (bpd) to 905,000 bpd. Ethanol stocks declined 179,000 barrels to 17.02 million barrels.
Soybean futures again reversed course with the start of the day trading session to post fractional to 2-cent gains. But prices have since turned mostly weaker again.
- Futures are facing light profit-taking in most contracts after recent price strength.
- March beans again set new contract highs this morning. The May contract has come within 1 3/4 cents of the contract high at $13.95 3/4.
- Fundamentally speaking, support comes from more declines in production estimates for South America.
- Parana's ag department has trimmed the state's soybean crop estimate from 16.5 MMT to 14.47 MMT due to drought conditions.
- Dr. Cordonnier, Pro Farmer's South American consultant, trimmed his bean crop estimate for Brazil by 500,000 MT to 88.5 MMT yesterday.
- Plus, soybean order cancellations have not yet materialized. In fact, the soybean market benefited from a large old-crop bean sale yesterday.
- Gulf basis was steady for February delivery but 1 to 3 cents higher for all deferred delivery months, possibly signaling more demand news is on the horizon.
Wheat futures are down 3 to 4 cents in the SRW market, while HRW is down 1 to 2 cents in most contracts. HRS wheat is up 3 cents in the front-month contract, but marginally lower in deferreds.
- Gains in the U.S. dollar index are encouraging some light profit-taking in the wheat market today. Traders are taking advantage of the recent rally.
- But if corn and soybeans rally again, wheat may follow suit.
- Pressure on futures is being limited by concerns about transportation problems in Canada, but fresh demand news is needed to keep futures supported at current levels.
- In addition, another winter storm event is expected to move in this weekend and be followed by another blast of cold air keeps winterkill concerns close at hand.
Live and feeder cattle futures gapped higher on the open and are moderately higher in most contracts.
- Ongoing strength in the boxed beef market along with growing expectations for higher cash cattle trade this week are lifting futures.
- Also, the gap-higher start and the setting of new contract highs triggered buy stops.
- Choice boxed beef values firmed another 68 cents yesterday while Select rose $1.31. For the week, Choice values are up $3.83 and Select is $1.95 higher. But the price gains have slowed movement. Just 116 loads changed hands yesterday.
- Gains in the boxed beef market and the forecast for yet another winter storm and ongoing cold temps are expected to result in higher cash cattle trade compared with last week's $144 to $145 action in Texas and Kansas.
- However, packers continue to deal with negative cutting margins and showlists are up overall this week. A 17,000-head increase in Texas and Kansas feedlots is only partially offset by a 13,000-head decline in Nebraska and Colorado.
- Spillover from live cattle and concerns about tight supplies are lifting feeder cattle futures.
Lean hog futures are slightly higher in most contracts this morning.
- Nearby lean hog futures gapped higher on the open, setting new contract highs in the process. The bullish technical posture of the market and positive fundamentals are again propelling the market. Spillover from live cattle is also supportive.
- However, there is the risk of profit-taking as most contracts are overbought according to both the 9- and 14-day Relative Strength Index.
- Bulls are encouraged by ongoing improvement in the pork market. Yesterday the pork cutout value rose $1.27 to $99.59 per hundredweight. Even more impressive, movement picked up to 406.14 loads, alleviating concerns about slowed retailer demand.
- Meanwhile, concerns about the porcine epidemic diarrhea virus (PEDV) remain an underlying source of support.
- Also, packers are paying steady to higher prices for cash hogs again today as recent price gains in the pork market have improved profit margins and processors are looking ahead to more winter storms this weekend and early next week, which could again slow transportation.