Market Snapshot, 10:00 am CT (VIP) -- January 23, 2013

January 23, 2013 04:10 AM
 

Corn futures improved to narrowly mixed trade with the start of pit trading.

  • Choppy trade is being seen as fresh news is limited today. Futures moved back into positive territory with the start of pit trading, but buying interest has faded.
  • Steady to lower Gulf basis levels this morning remind traders of stagnant export demand.
  • But the tight supply picture and ongoing concerns about dryness in Argentina and southern Brazil -- while not enough to spark active buying interest -- will limit selling interest.
  • Countering this are reports of better-than-trendline yields in early harvested corn in Brazil's Rio Grande do Sul.
  • The five-day forecast is more favorable for rain across Brazil and there are rain chances for Argentina Thursday.

 

Soybean futures have improved to post gains around 1 to 4 cents in most contracts.

  • Early losses in soybeans gave way to some short-covering as traders are unwilling to be caught short the market considering strong soy export demand, tight U.S. supplies and dryness concerns in Argentina and southern Brazil.
  • But buying interest is also limited by expectations South America's bean crop will still be record-large. These supplies will soon hit the export market.
  • Gulf basis was steady this morning, signaling another daily export sales announcement is not likely imminent.
  • Soybeans' posture on the charts is much improved, which has also encouraged some technical-based buying.

 

Wheat futures have reversed course to post gains around 2 to 3 cents in Chicago while Kansas City and Minneapolis wheat are mostly 5 to 8 cents higher.

  • Improved rain chances for Kansas over the next five days put light pressure on wheat early this morning.
  • But considering widespread, severe drought, this pressure has given way to short-covering as much more widespread, significant precip is needed for the Southern and Central Plains.
  • There is also concern about winterkill to wheat in more northern locations.
  • Wheat is also benefiting from an easing of earlier losses in corn and soybeans.

 

Live cattle futures got off to a mixed start, but the market has since softened to post slight losses. Feeder cattle futures are slightly to moderately lower.

  • Traders are weighing a disappointing Cold Storage Report for the end of December against an impressive boxed beef market performance yesterday.
  • Frozen beef stocks at the end of December came in above expectations and year-ago levels. But boxed beef values staged strong gains yesterday and movement was especially impressive at 394 loads.
  • This surge in beef movement at higher prices could signal the market is working on a low.
  • Light support also stems from tighter showlist estimates at all locations this week. If the boxed beef market continues to improve, this could point to higher trade compared with last week's $122 to $125 cash trade.
  • Light support also stems from expectations Japan will soon ease its beef import restrictions for the U.S. and Canada.
  • Traders are also beginning to ready positions for Friday's Cattle on Feed Report, which is expected to show Placements at 104.1%, On Feed at 95.6% and Marketings at 93.2% of year-ago levels.

 

Lean hog futures are posting slight to moderate losses this morning.

  • Yesterday's Cold Storage Report showed heavier-than-anticipated frozen pork stocks as of Dec. 31 that were up 11% over year-ago levels.
  • Somewhat offsetting this, however, was a $1.23 rise in the pork cutout value and improved movement of 123.16 loads.
  • More improvement in the product market is needed, however, to pull packer profit margins out of the red.
  • Bitterly cold temps in the Midwest continue to limit hog movement and stress animals. As a result, cash hog bids are expected to again be mostly steady with scattered higher and lower bids.
  • Downside risk should remain limited for February lean hogs thanks to the nearly $1 discount the contract now holds to the cash hog index.
     
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