Market Snapshot, 10:00 am CT (VIP) -- January 17, 2013

January 17, 2013 04:13 AM
 

Corn futures continue to post losses around 2 to 4 cents in most contracts.

  • Corn futures continue to see light profit-taking pressure after the market's USDA report-inspired rally. Selling interest remains limited by the tight carryover situation, however.
  • Also limiting pressure, this morning's weekly export sales of 393,300 MT for 2012-13 came in above expectations and the tally was a notable improvement from week-ago.
  • Also, International Grains Council trimmed its 2012-13 global corn carryover projection by 3 MMT to 113 MMT. IGC also raised its global corn production projection by 5 MMT from last month to 845 MMT, but this is still down 32 MMT from last year.
  • Also helping to keep production concerns in focus, Strategie Grains trimmed its European Union 2013-14 production estimate marginally to 62.8 MMT.
  • Gulf basis levels are a mixed bag this morning with January steady, February and March slightly lower and April and May delivery 4 and 1 cent higher, respectively.

 

Soybean futures have seen bouts of profit-taking this morning and are currently mixed with old-crop contracts mostly higher and new-crop contracts slightly lower.

  • Nearby soybean futures are receiving a boost from a reminder of impressive soy demand.
  • Weekly export sales of nearly 1.609 MMT (a marketing-year high) for 2012-13 and 180,000 MT for 2013-14 obviously topped expectations. China was the lead buyer.
  • Export sales of soymeal also topped expectations by a wide margin with 236,100 MT sold for 2012-13 and 9,000 MT for 2013-14. But soyoil sales disappointed at 12,900 MT.
  • USDA also announced a daily soybean sale of 240,000 MT to unknown destinations for 2013-14 this morning.
  • Meanwhile, building heat and dryness in Argentina remain concerning as a large South American crop is vital for easing the tight supply situation.
  • Gulf basis levels fell 8 cents for immediate delivery and 3 cents for January delivery this morning, signaling another dose of daily demand news may be a ways out.

 

Wheat futures have softened to trade roughly 1 to 3 cents lower in Chicago, 2 to 7 cents lower in Kansas City and mixed in Minneapolis.

  • Pressure on corn and soybeans has encouraged profit-taking in the wheat market.
  • News Iraq bought 300,000 MT of wheat from Australia and Canada is adding light pressure as it reminds the market U.S. prices have struggled to attract export business.
  • Also encouraging light selling was improvement in the Southern and Central Plains according to the weekly Drought Monitor. But much more precip is needed and the extended weather outlook is not favorable. The 90-day outlook calls for below-normal precip from Kansas southward.
  • The International Grains Council raised its global wheat production projection 2 MMT from last month to 656 MMT, which is adding light pressure despite the fact that the total is sharply below year-ago.
  • Weekly wheat export sales of 536,200 MT for 2012-13 and 38,500 MT for 2013-14 are also limiting selling interest, as the total was within expectations and much improved over last week.
  • News Strategie Grains has cut its 2013-14 EU-27 wheat crop forecast by around 2 MMT to 132.3 MMT due to lower planted area is also limiting pressure.

 

Live cattle futures got off to a slightly higher start, but they have since softened to mixed trade. Feeder cattle futures are slightly to moderately lower.

  • Live cattle futures have seen both corrective short-covering and light followthrough selling after futures plummeted ahead of the close yesterday.
  • This selloff was sparked by cash cattle trade at $125 in Kansas and Texas and at mostly $124 in Nebraska yesterday, which was down $1 from the bulk of trade last week and well below nearby futures contracts. Trade is thought to be largely complete.
  • Improvement in the boxed beef market yesterday is limiting selling interest. Choice values firmed 37 cents and Select rose $1.28. Movement was solid at 183 loads.
  • Weekly beef export sales of 18,000 MT were much improved from last week.
  • Selling interest is also being limited by a decline in unemployment claims to a five-year low as well as some positive housing data this morning. Positive economic signs bode well for red meat demand.
  • Most feeder cattle futures are seeing followthrough selling as the market did major chart damage yesterday.

 

Lean hog futures gapped higher on the open and are currently enjoying slight to moderate gains.

  • Lean hog futures are benefiting from ideas the downside has been overdone recently.
  • The pork cutout value rose 49 cents and movement was solid at 99.99 loads yesterday.
  • Cash hog bids are steady to firmer again today as some packers are still in need of supplies for what will be a holiday-shortened week for those plants that observe Martin Luther King Jr. Day.
  • Market-ready supplies are expected to gradually tighten over the next few weeks as per the seasonal trend. This will keep the cash and thus futures markets supported, especially if packer profit margins improve.
     
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