Market Snapshot, 10:00 am CT (VIP) -- January 14, 2013

January 14, 2013 04:12 AM
 

March through July corn futures continue to post double-digit gains while new-crop months are narrowly mixed.

  • Traders continue to digest Friday's USDA reports that pointed to even tighter-than expected supply levels, as both 2012-13 carryover and Dec. 1 grain stocks came in below pre-report expectations, largely due to stronger-than-anticipated domestic feed demand.
  • This has encouraged traders to actively bull spread corn futures.
  • But export demand for corn remains lackluster. Reminding the market of this, Gulf corn basis is 2 to 3 cents lower for nearby delivery this morning.

 

Soybean futures have surged to trade 30-plus cents higher through the August contract, with deferred months seeing gains in the teens.

  • News China purchased 120,000 MT of U.S. soybeans for 2012-13, following several daily soybean sales last week signals some "value buying" is occurring.
  • Steady to 5 cents higher Gulf basis levels signal more export demand news may lie ahead.
  • Also, a drier forecast for some southern areas of Brazil is adding light support.
  • While NOPA data showed soybean crush for December around 1 million bu. below expectations at 159.9 million bu., this was still a 2.6 million bu. increase from the month prior. Soyoil stocks of 2.6 billion lbs. met expectations.
  • Also, CME Group lowered its minimum margins on the Chicago Board of Trade for soybeans and wheat futures.

 

Wheat futures have extended early gains to trade mostly 13 to 17 cents higher in Chicago and Kansas City, while Minneapolis is seeing slightly lighter gains.

  • Wheat is enjoying followthrough buying after bullish report data from USDA Friday. USDA's wheat carryover and winter wheat seeding estimates came in below expectations.
  • Traders are also noting concerns about freeze damage to Russian wheat, although there is snow in the near-term forecast which would provide insulation against frigid temps. One Russian agency says up to 25% of the crop could be impacted by winterkill.
  • There is also some concern about winter wheat in the U.S. Central Plains being damaged by frigid temps, especially considering this crop went into dormancy in tough shape.
  • Wheat is also benefiting from CME Group's decision to lower its minimum margin amount for wheat trading on the Chicago Board of Trade.

 

Live cattle futures opened under pressure, but they have since improved to mixed trade. Feeder cattle futures are moderately lower.

  • Last week, cash cattle trade took place at mostly $126, which was down around $2 from cash trade the week prior and around $4 below current futures prices. Thus, traders are engaging in some light profit-taking to start the week.
  • Mixed boxed beef prices Friday and relatively slower movement of 157 loads are adding light pressure.
  • But tightening cattle supply prospects for the year-ahead are limiting downside risk.
  • Strength in the corn market thanks to USDA's forecast for tighter-than-expected corn supplies Friday is pressuring feeder cattle futures.

 

Nearby lean hog futures are higher this morning, while far-deferred months are under light pressure.

  • Early cash hog bids are steady to slightly higher, which is encouraging some light short-covering in lean hogs amid ideas the downside was overdone last week.
  • The pork cutout value rose 43 cents Friday and movement was solid at 91.71 loads. This helped packer margins, although they remain in the red..
  • Also, while U.S. pork exports slipped in November from the month prior, yearly exports are still on pace to be record-large for 2012.
  • While USDA raised its 2013 pork production projection on Friday, it also raised its export forecast for 2013.
     
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