Market Snapshot, 10:00 a.m. CT (VIP) -- January 29, 2014

January 29, 2014 04:07 AM
 

Corn futures are 1 to 2 cents lower this morning.

  • Lacking fresh news, traders in the corn market are left to contemplate expectations for a large South American crop and ample U.S. corn supplies.
  • Strength in the U.S. dollar index preceding the conclusion of the FOMC meeting today adds profit-taking incentive.
  • But the market's downside has remained limited by signs prices have dipped far enough to attract strong export demand. Tomorrow's weekly export sales report will provide an update on that front.
  • A 2 to 3-cent rise in Gulf corn basis this morning for all contracts except February delivery signals more demand news may lie ahead.
  • Ethanol production over the last week dropped 5,000 barrels per day to 900,000 bpd, while ethanol stocks dipped 86,000 barrels to 16.93 million barrels.

 

Soybean futures have extended early losses to trade 10 to 11 cents lower in old-crop futures while new-crop is mostly 3 to 4 cents lower.

  • Dollar strength and anticipation of Chinese soybean order cancellations are weighing on the soybean market this morning.
  • While China has yet to give any indication it will cancel U.S. soybean orders, traders remain concerned this will happen soon. Brazil is expected to begin shipping its record-large crop next month and China has front-ordered its bookings.
  • Adding to such concerns is the continued spread of the H7N9 bird flu in China. If a widespread outbreak occurs, this could take a bite out of the country's feed needs.
  • USDA's ag attaché in Brazil recently pegged the country's soybean crop at 89.5 MMT and said he expects exports of 46 MMT. USDA in January projected a crop of 89 MMT with exports of 44 MMT for Brazil.

 

SRW wheat has softened to post double-digit losses while HRW wheat is down 7 to 14 cents. HRS wheat is 6 to 8 cents lower.

  • Early pressure on the wheat markets pushed them through contract-low support, triggering sell stops and accelerating losses. Strength in the U.S. dollar index adds incentive to sell.
  • Traders have showed limited reaction to winterkill concerns this week or since the start of the month as traders will not receive an update on the condition of the crop until April.
  • Also, some believe the good shape of the crop as it entered dormancy will help it to bounce back from any damage.
  • Gulf SRW wheat basis firmed 3 to 5 cents for near-term delivery, reflecting improved demand.

 

Live cattle futures are posting slight losses this morning. Feeder cattle futures are mixed with most contracts posting slight losses.

  • A pullback in the boxed beef market yesterday adds to ideas cash cattle trade is likely to get underway at lower prices this week.
  • Last week trade took place at mostly $147 in the Southern Plains, while northern locations saw action at $150.
  • Yesterday, Choice and Select boxed beef dipped $2.24 and $3.39, respectively, but movement was still relatively light at 103 loads.
  • Showlist estimates are higher this week, but this is somewhat offset by stressfully cold temps to start the week.
  • Another factor that should prevent a major pullback in cash prices are strong packer profit margins.
  • Traders are also beginning to look ahead to the Cattle Inventory Report, which is expected to show all cattle and calves at 98.6% of year-ago levels while the annual calf crop is expected to come in at 97.9% of year-ago levels.
  • Feeder cattle futures are seeing spillover from live cattle as well as profit-taking amid ideas a top may be in place. Strength in the U.S. dollar index adds incentive to do so.

 

Lean hog futures are posting slight to moderate gains today.

  • Cash and product market strength are lifting lean hog futures today.
  • The pork cutout value gained 48 cents yesterday and movement picked up to 378.57 loads. This is the fourth consecutive day of gains, lifting hopes the product market may have finally put in a seasonal low.
  • Traders also expect pork demand to improve in the month ahead as retailers begin passing record-high boxed beef prices on to consumers.
  • Cold temps, snow, ice and wind slowed hog transportation to start the week. As temps moderate in the Midwest today, packers are expected to pay steady to higher prices for market-ready hogs. Early cash bids are steady.
  • While the cash hog index continues to strengthen, the front-month has maintained a $4 to $5 premium to the index.
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