Market Snapshot, 10:00 am CT (VIP) -- February 28, 2013

February 28, 2013 04:07 AM
 

Old-crop corn futures are 6 to 7 cents higher, while new-crop futures are mostly 1 to 3 cents higher.

  • Old-crop corn futures are benefiting from renewed concerns about tight supplies given indications of improving demand after recent price pressure.
  • This morning's weekly export sales of 302,600 MT for 2012-13 and 210,000 MT for 2013-14 came in above expectations and represent a marked improvement from recent weeks.
  • Plus, there's historically high basis levels around the country.
  • There were no deliveries against the March corn contract today (the first delivery day), due to the strong cash market.
  • Buying interest in new-crop corn is being limited by snow in the western Corn Belt this week. Plus, the National Drought Monitor notes that rain last week from Illinois to Missouri may have led to some improvement in drought in those regions.

 

Soybean futures improved with the open of pit trading to trade mostly 12 to 20 cents higher in old-crop contracts. New crop futures are mixed with an upside bias.

  • Soybean futures are being supported by stronger-than-expected weekly export sales of 689,000 MT for 2012-13 and 482,000 MT for 2013-14. The net total topped expectations and the 1 MMT mark, signaling still-strong demand for U.S. soybeans. China bought 474,800 MT of old-crop U.S. beans and 350,000 MT of new-crop supplies for the week.
  • Plus, USDA announced a daily sale of 123,000-MT of beans to China for 2013-14.
  • A 7-cent surge in Gulf basis for immediate delivery signals more demand news may be on the horizon.
  • Plus, historically strong basis levels around the country and the fact that there were no deliveries against the March bean contract on the first notice day reminds traders of tight supplies.
  • But buying interest in deferred contracts is being limited by expectations that South American supplies will eventually slow demand for U.S. soybeans. Plus, soybean production in 2013-14 is expected to rebound. Recent precip in the Corn Belt adds to such ideas.

 

Wheat futures have firmed to trade mostly 8 to 10 cents higher in Chicago, 12 to 15 cents higher in Kansas City and 8 to 18 cents higher in Minneapolis.

  • Wheat futures are benefiting from short-covering to wrap up the month of February as the market views the downside as overdone.
  • Supporting this idea are recent signs export demand is improving. This morning's Weekly Export Sales Report showed sales of 372,600 MT for 2012-13 and 152,300 MT for 2013-14. This matched expectations but represented improvement over last week.
  • Plus, news Russia's government may compete with exporters as they buy grain from the country's southern breadbasket to replenish intervention stocks reminds of tightening global wheat stocks.
  • Also, the latest drought monitor reflects just minor improvement across the Central and Southern Plains, although more substantial improvement should be noted in next week's update, as it will reflect this week's impressive snowfall.

 

Live and feeder cattle futures are enjoying slight gains this morning.

  • Live cattle futures are enjoying followthrough buying on signs the boxed beef market may have put in a short-term low. This is encouraging some short-covering as traders close the books for the month of February.
  • Yesterday, Choice and Select values both enjoyed strong gains, as has been the trend this week. Plus, movement improved slightly to 187 loads.
  • This along with tighter showlist estimates has most expecting firmer cash cattle trade compared with $123 to $125 action last week.
  • Feedlots are still working to round up cattle after the winter storm event early this week, not to mention the conditions have resulted in substantial weight loss for the animals.
  • Plus, packer profit margins continue to improve, though they remain in negative territory. Packers have yet to place bids, signaling trade won't likely take place until Friday.
  • But highly disappointing weekly beef export sales of 3,900 MT that included order cancellations by Japan add a note of caution.
  • Feeder cattle futures are benefiting from overdue corrective short-covering.

 

Lean hog futures are off to a slightly higher start.

  • Traders are engaging in some light short-covering as they work to correct the sharply oversold condition of the market ahead of month-end
  • The pork cutout value improved 33 cents yesterday and the movement was solid at 68.25 loads, adding light support.
  • But the cash hog market is again steady to lower as this week's kill is expected to be down slightly and most packers are bought ahead into next week.
  • Outside markets are a mixed bag, as the U.S. dollar index is firmer and the stock market and crude oil futures are bouncing around unchanged. Traders are uneasy about the sequester slated to occur tomorrow, barring any last-minute deal.
     
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