Market Snapshot, 10:00 am CT (VIP) -- January 16, 2013

January 16, 2013 04:11 AM
 

Corn futures have softened to post losses around 2 to 4 cents in all but far-deferred contract, which are mixed.

  • Corn futures initially benefited from some light technical buying as nearby contracts settled above the 50-day moving average for the first time since early December yesterday. But this has since given way to profit-taking.
  • Hot, dry conditions in Argentina and the forecast for more of the same are limiting selling interest. Unseeded acres in the country are also getting more attention as any late-planted corn likely has diminished yield potential.
  • Talk continues to circulate that Argentina will cap corn exports, but no official announcement has been made.
  • But steady Gulf basis levels this morning signals export demand news remains lacking. This will continue to limit buying interest in corn futures.
  • Taiwan's purchase of Argentine corn this morning is also a reminder of this.

 

Soybean futures continue to enjoy gains of mostly 10 to 17 cents.

  • Developing heat and dryness in Argentina is drawing more market attention, especially as a bumper crop is needed to ease the tight supply situation created by the U.S. bean crop shortfall.
  • Consequently, private crop estimates are declining. Yesterday, Pro Farmer South American consultant Dr. Michael Cordonnier cut his forecast by 1 MMT to 53 MMT.
  • But conditions remain favorable in Brazil, which is somewhat offsetting crop concerns in Argentina.
  • Gulf basis slid 2 cents for immediate delivery this morning. But recent commercial buying suggests there may be some fresh export business on the horizon.

 

Wheat futures have trimmed early gains to trade 1 to 3 cents higher in Chicago, with Kansas City and Minneapolis seeing marginally stronger gains.

  • Wheat futures continue to benefit from concerns about wheat in the Central Plains recently being exposed to frigid temps as well as widespread drought for winter wheat country.
  • The Southern Plains have recently benefited from 1 to 3 inches of precip, but the 6- to 14-day forecast returns to a dry weather pattern and much more precip is needed to relieve drought.
  • There are also concerns about winterkill in southern and western Russia.
  • But until there are signs export demand for U.S. wheat is improving, the market's upside potential will remain limited to short-covering.
  • Gulf basis firmed 3 cents for immediate delivery this morning, which could signal export demand news lies ahead.
  • But countering this is India's plans to export 10 MMT of government wheat stocks.

 

Live cattle and feeder cattle futures are posting slight losses this morning.

  • This week's lackluster boxed beef performance along with steady showlist estimates signal that at best, steady cash cattle prices are likely. Trade last week took place between $125 and $128, with northern locations seeing the lower end of this range.
  • Futures remain at a premium to these prices, which is encouraging light selling interest. But maintaining some premium is likely justified as supplies are expected to tighten through 2013.
  • Late-week cash cattle trade is likely; the spread between packer bids and asking prices remains wide.
  • Boxed beef prices were again mixed yesterday, though movement was decent at 181 loads. This is in line with the seasonal trend for slowed demand following the holidays.
  • Another day of strength in the corn market is weighing on feeder cattle futures, though selling interest is being limited by the discount the January contract holds to the cash index.

 

Lean hog futures got off to a choppy start, but nearby contracts have improved to post slight gains.

  • Traders continue to oscillate between short-covering and profit-taking in the hog market on a lack of near-term direction.
  • The cash hog market has been steady of late as negative packer profit margins have kept them from aggressively raising bids.
  • Today, cash hog bids are again mostly steady, with some firmer bids in western locations and weaker bids in eastern locations.
  • Yesterday's 34-cent gain in the pork cutout value improves packer cutting margins, but they will need to move solidly into the black to boost the cash market.
  • Nearby futures are trading near in line with the cash hog index, also limiting near-term direction.
  • Average hog weights for Iowa and Southern Minnesota for the week ended Jan. 12 rose 0.2 lb. from the week prior.
     
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