Market Snapshot, 10:00 am CT (VIP) -- January 18, 2013

January 18, 2013 04:06 AM
 

 

Corn futures continue to see gains around 1 to 3 cents across the board.

  • Fresh news is lacking in the corn market today, so traders are focused on evening positions ahead of what will be an extended weekend from the markets as grain futures are closed Monday in observance of Martin Luther King Jr. Day.
  • Short-covering is the extent of buying interest as dryness concerns in Argentina are considered baked into prices (for now) and there have been few signs lackluster export demand is changing.
  • This morning, Gulf basis slid for 1 to 3 cents for March and April delivery, while other months were steady.
  • Strength in the U.S. dollar index due to a drop in consumer sentiment in January is curbing buying interest.

 

Soybean futures have softened to trade fractionally to 7 cents lower through the August contract and narrowly mixed in deferred months.

  • Traders are taking advantage of dollar strength and the recent soybean rally by booking profits ahead of the what will be an extended holiday weekend.
  • While the forecast for Argentina remains unfavorably dry and hot, traders will wait until next week to build more premium into prices if the weather pattern remains unchanged.
  • Pressure is being limited by news China National Grain and Oils Information Center says Chinese purchases from the U.S. and South America last week totaled 1.8 MMT to 1.98 MMT -- well above the "normal" 1.2 MMT -- thanks to positive crush margins.
  • Also, China's economy grew at 7.9% in the fourth quarter. This was a 0.5 percentage point rise from the third quarter and a welcome break from seven consecutive quarters of slower growth. This has bulls optimistic strong Chinese soy demand will continue in 2013.

 

Chicago wheat is narrowly mixed, while Kansas City remains 1 to 2 cents lower. Minneapolis wheat has improved to post slight gains in most contracts.

  • Traders are focusing on evening positions ahead of the weekend, with dollar strength limiting buying interest.
  • But that is the extent of selling interest as dryness in winter wheat country remains concerning. Both the near-term and long-term forecasts call for little chance of relief.
  • Traders are unlikely to actively add long positions in wheat futures until it sees signs U.S. wheat is competitive on the global export market.

 

Live cattle futures are off to a choppy start with nearbys moderately lower and deferred months steady to higher.

  • Nearby live cattle futures are seeing some light followthrough selling after the market saw serious technical chart damage following news Cargill will idle a Texas beef processing plant after Feb. 1.
  • Deferred months, on the other hand, are benefiting from corrective short-covering as the long-term supply outlook is still bullish for cattle and the plant had already been running at reduced slaughter capacity for an extended period.
  • Light pressure on nearby contracts also stems from steep declines in boxed beef prices yesterday, though this did encourage strong movement of 215 loads.
  • Yesterday's price plunge brought February live cattle in line with this week's cash cattle prices. This signals additional downside pressure should be limited as the cash market is expected to firm in the months ahead.

 

Lean hog futures are posting slight losses in most contracts this morning.

  • Traders are wrapping up the week by booking profits. Strength in the U.S. dollar index is supportive to that end.
  • Also encouraging some to exit long positions is a 37-cent slide in the pork cutout market yesterday. This, along with steady to higher cash hog bids this week, have pulled packer profit margins deeper into the red. As a result, cash hog bids are mostly steady today.
  • Light pressure also stems from news China's 2012 pork production rose 5.6% from the year prior. The country is a major importer of U.S. pork.
  • Expectations for supplies to tighten in the weeks ahead will keep a floor under the cash hog market as well as futures.
  • February lean hogs are trading in line with the cash hog index, limiting both buying and selling interest.

 

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