Market Snapshot, 10:00 a.m. CT (VIP) -- January 30, 2014

January 30, 2014 03:57 AM
 

Corn futures have strengthened a touch to trade 4 to 6 cents higher, with old-crop leading gains.

  • Traders are adding long positions as they are encouraged by signs corn prices are rebuilding demand.
  • Weekly corn export sales of 1.838 MMT for 2013-14 and 105,700 MT for 2014-15 came in more than 2.5 times the top end of expectations. Exports of just over 1 MMT were also impressive and up 38% from the prior four-week average.
  • Adding to the strong demand picture, USDA announced a 127,000 MT corn sale to unknown destinations for 2013-14.

 

Soybean futures are split amid bull spreading with old-crop 1 to 2 cents higher and new-crop narrowly mixed.

  • Traders continue to weigh fears about upcoming demand against confirmation that demand for U.S. soybeans is strong for the time being.
  • This morning's Weekly Export Sales Report showed purchases of 494,800 MT for 2013-14 and 371,000 MT for 2014-15, which met expectations. While this was a bit lighter than recent strong tallies, weekly exports impressed at nearly 2.115 MMT -- a 39% increase from week-ago.
  • But traders are on-watch for order cancellations from China. This morning's export sales report included a 610,300 MT cancellation by unknown destinations. Also, the upcoming Chinese Lunar New Year celebration often slows demand.
  • Adding to concerns about slower Chinese demand is yet another sign of contraction in China's manufacturing sector, as well as the ongoing spread of the H7N9 bird flu.

 

SRW and HRW wheat are 1 to 3 cents higher, while HRS wheat is slightly lower.

  • The winter wheat markets are benefiting from corrective short-covering amid ideas the downside was overdone yesterday. In addition, some parts of winter wheat country are expected to get hit with another blast of cold temps.
  • Light support also stems from this morning's weekly export sales data that showed sales of 794,900 MT for 2013-14 and 2,000 MT for 2014-15. This was well above expectations and signals U.S. wheat is a value buy.
  • But pressure on the HRS market stems from sharp strength in the U.S. dollar index and the obvious downward posture of the wheat markets.
  • Also, International Grains Council today increased its total world grain production outlook to 1.964 MMT, which would be a 10% increase from year-ago.

 

Live cattle futures are slightly higher in the front-month and slightly lower in deferreds. Feeder cattle futures are split with nearbys marginally lower and deferreds firmer.

  • The steep decline in the boxed beef market following its equally steep rally to record highs is prompting expectations for lower cash cattle trade this week.
  • Adding to such ideas are larger showlists in most locations this week, though cold weather and winter precip this week has stressed animals.
  • Also, declining beef prices have significantly cut into packer profit-margins, though they remain in the black.
  • Last week cash cattle trade took place at $147 to $150, with the Southern Plains seeing action primarily at the lower end of that range.
  • February futures are already $5 below the lower end of last week's range, which is helping to limit selling interest.
  • Traders are also looking ahead to Friday's Cattle Inventory Report. It is expected to show all cattle and calves at 98.6% of year-ago and the annual calf crop at 97.9% of year-ago.
  • Strength in the corn market along with the a sharply higher U.S. dollar index are encouraging light profit-taking in feeder cattle futures.

 

Lean hog futures are off to a mixed start with nearbys marginally lower and deferreds slightly higher.

  • Nearby lean hog futures are facing some light profit-taking following yesterday's strong gains. Strength in the U.S. dollar index adds incentive for traders to do so.
  • Selling interest is limited thanks to improvement in the product market. Movement has picked up every day this week, despite consistent improvement in prices. Yesterday, the pork cutout value ticked up a penny and movement was solid at 405.78 loads.
  • Traders are optimistic retailers will feature pork late winter/early spring due to lofty boxed beef prices.
  • Also, slowed hog transportation due to frigid temps and poor road conditions early this week is resulting in steady to higher cash hog bids today as packers are working to book needs ahead of the next winter weather event.
  • February lean hogs remain at a steep premium to the cash hog index, which is also giving bears an edge.
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