Market Snapshot, 10:00 am CT (VIP) -- February 5, 2014

February 5, 2014 04:07 AM
 

Corn futures are 1 to 2 cents lower this morning.

  • The corn market is seeing some light profit-taking after four consecutive days of gains.
  • Mixed Gulf basis action also raises concerns about how far prices can rise before export demand is curbed. Basis slid 3 and 2 cents for February and June delivery, respectively, while other months were steady to a penny higher.
  • However, USDA this morning announced an unknown buyer purchased 185,928 MT of old-crop corn and 50,800 MT for 2014-15, signaling demand has not yet slowed.
  • Light pressure also stems from news ethanol production for the week ended Jan. 31 declined 5,000 barrels per day (BPD) to 895,000 bpd. Ethanol stocks fell 193,000 barrels to 16.74 million barrels.

 

Soybean futures are 3 to 6 cents higher. Nearby contracts are leading gains.

  • Soybean futures are enjoying some technical-based buying as the nearby contracts moved above the psychologically significant $13.00 level this week.
  • A weaker U.S. dollar index is also supportive.
  • Heat and dryness in southern regions of Brazil has been a source of support.
  • In addition, the market has been encouraged by the fact that China has not yet announced any significant U.S. soybean order cancellations, despite the start of the Brazilian shipping season. However, the country is also in the midst of its Lunar New Year celebration.
  • Traders will watch tomorrow's Weekly Export Sales Report closely to see if China has canceled any orders.
  • Gulf soybean basis firmed 3 cents for May and June delivery and it held steady for other months this morning. This signals ongoing export demand strength.

 

Wheat futures were under pressure, but have firmed to trade fractionally to 2 cents higher in most SRW, HRW and HRS contracts.

  • Profit-taking weighed on wheat through the overnight hours and at the start of the daytime session. But light buying interest has surfaced.
  • January blasts of cold temps when snowcover was less favorable have led to declines in the condition of the wheat crop. The portion of the wheat rated "good" to "excellent" has fallen from 70% to 60% in South Dakota; 65% to 46% in Nebraska; 60% to 46% in Montana; 63 to 36% in Oklahoma; 58% to 35% in Kansas; and 22% to 19% in Texas, according to USDA.
  • However, traders are encouraged by much-improved snowcover in winter wheat country, including some snow in the Southern Plains that will provide needed moisture.

 

Live and feeder cattle futures are posting slight gains in most contracts.

  • Live cattle futures are benefiting from some light short-covering today, encouraged by the wide discount futures hold to last week's $144 to $145 cash cattle trade.
  • Some now expect steady prices compared with last week's cash action, since the boxed beef market showed signs of halting its steep slide yesterday and showlist estimates are down from week-ago
  • In addition, cold temps since the start of the new year have slowed weight gain, encouraging some producers to hold cattle back to add some extra pounds before sending them to market.
  • Yesterday, Choice boxed beef values rose 40 cents while Select fell 21 cents. However, movement was again light, signaling prices have not yet dipped to levels that spur strong demand.
  • The recent declines in boxed beef prices means packer profit margins are again in the red.
  • Softer corn prices and ideas the downside has been overdone are lifting feeder cattle futures.

 

Lean hog futures are moderately to sharply higher this morning, after a gap-higher start for many contracts.

  • Strength in the product and cash markets are lifting futures this morning.
  • The pork cutout value surged $1.40 yesterday, and even more notable, movement picked up to 424.65 loads. This has renewed optimism pork demand will rise as recent record-high beef prices are passed on to consumers.
  • Recent and ongoing winter precip and cold temps have slowed hog transportation. However, some plants may also reduce kill hours.
  • Average hog weights in Iowa and southern Minnesota declined 1.3 lbs. the week ended Feb. 1. This is still well above year-ago levels, however. Head counts are up over both week- and year-ago.
     
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