Market Snapshot, 10:00 am CT (VIP) -- January 15, 2013

January 15, 2013 04:07 AM
 

Corn futures have improved to post gains of 2 to 5 cents across the board.

  • Corn futures are benefiting from a return of some fund buying this week after USDA on Friday pegged carryover and Dec. 1 stocks at tighter-than-expected levels.
  • But unless this supply news is countered by fresh export news, the market's upside is likely limited to corrective short-covering.
  • Gulf basis levels fell a penny for March delivery while other months were steady this morning. This signals fresh export demand is not likely on the horizon.
  • Taiwan issued a tender for 60,000 MT of optional origin corn for March delivery this morning. Asian countries have recently stepped up corn buys, which signals they anticipate higher prices ahead, but South America has been the recipient of most of this business.
  • A drier weather pattern for Argentina is also providing light support, though this situation is not yet overly concerning.

 

Soybean futures softened with the open of pit trading to narrowly mixed trade, but they have since improved again to post gains of mostly 1 to 4 cents.

  • Soybean futures saw profit-taking overnight and dollar strength on solid retail sales data has encouraged a bit more of that this morning.
  • But that is the extent of selling interest as recent soybean sales announcements signal soybeans have attracted value buying for a relatively tight supply. Historically high basis levels around the country emphasize this.
  • Developing heat and dryness in Argentina are also providing light support, though the South American crop is still expected to be record-large.

 

Wheat futures have firmed to post double-digit gains in Chicago while Kansas City and Minneapolis wheat are mostly 8 to 10 cents higher.

  • Wheat continues to benefit from Friday's USDA reports that showed stronger-than-anticipated feed demand as well as lower-than-expected winter wheat seedings.
  • The market had been under pressure ahead of the reports, so traders are working to correct oversold conditions.
  • The market is also benefiting from concerns about dryness and cold damaging the U.S. winter wheat crop. The Southern Plains have benefited from precip this week, however.
  • In addition, reports yesterday that a substantial amount of the Russian wheat crop was potentially damaged by winterkill remains on traders' minds.
  • Plus, the State Statistics Service says Ukraine's grain production totaled 46.17 MMT in 2012, which is down 18.6% from year-ago. This reminds investors of tightening global supplies.
  • But for this to sustain buying interest, U.S. wheat must see a significant increase in export business. This has yet to occur.

 

Live cattle futures are narrowly mixed in early trade. Feeder cattle futures are posting slight losses.

  • Uncertainty regarding near-term cash cattle trade prospects are keeping live cattle futures choppy this morning.
  • Showlist estimates are steady with week-ago as heavier numbers in Nebraska are offset by declines elsewhere.
  • Boxed beef action to start the week also provided little in terms of direction as prices were mixed and movement was decent, but not impressive. The month of January is often a lackluster month for beef demand as consumers rein in spending after the holidays.
  • Packers are trimming slaughter schedules in an effort to improve poor margins, but expectations for supplies to continue to tighten this year limit downside risk for futures.
  • Late-week cash trade is expected as packers have yet to establish initial bids.
  • Strength in the corn market continues to weigh on feeder cattle futures.

 

Lean hog futures are under light pressure in most contracts this morning.

  • Lean hog futures are facing light profit-taking pressure today after the market posted a high-range close yesterday. Dollar strength is also encouraging of this.
  • Adding light pressure, the pork cutout value slid 48 cents yesterday and movement slowed to just 31.5 loads.
  • But selling interest in nearby contracts is being limited by steady to higher cash hog bids this morning as some packers are in need of supplies. Plus, the February contract is trading near in line with the cash hog index.
  • But until packer margins move back into the black, upside potential for the cash market and thus futures is limited.
     
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