Market Snapshot, 10:00 am CT (VIP) -- January 31, 2013

January 31, 2013 04:08 AM
 

Corn futures have pared losses a touch to trade 2 to 4 cents lower, with nearby contracts seeing the lightest losses.

  • Traders are taking a step back and booking some profits today after being reminded of lackluster export demand this morning.
  • While export sales for the week ended Jan. 24 of 186,800 MT for 2012-13 and 66,500 MT for 2013-14 met expectations, the tally was not the improvement for which bulls had hoped.
  • Recent improvement in Gulf basis had spurred such hopes. This morning, Gulf basis firmed a penny for January through March delivery.
  • Also encouraging light profit-taking is a wetter 11- to 15-day forecast for Argentina. Plus, rain amounts yesterday topped expectations and there is more in the forecast for the weekend.

 

Soybean futures softened slightly with the start of the open-outcry session to trade 6 to 14 cents lower. Nearby contracts are leading losses.

  • Soybean futures posted 20-plus cent gains in most contracts yesterday. Today traders are working to book some profits as they close out books for the month.
  • There is rain in the forecast for Argentine this weekend and the extended forecast also turned slightly wetter. Thus, traders are waiting to see how these forecasts play out and booking some profits in the meantime.
  • Adding to the negative tone, Gulf basis plummeted 15 and 10 cents for January and February delivery, respectively, today.
  • But downside risk is limited by China's insatiable soybean appetite. Weekly export sales of 386,000 MT for 2012-13 and 867,000 MT for 2013-14 came in well above expectations. China accounted for nearly 1 MMT of the 1.253 MMT total.
  • Also this morning, USDA announced that China purchased another 220,000 MT of 2013-14 soybeans.

 

Wheat futures are extending losses to trade 7 to 8 cents lower in Chicago, with slightly lesser losses in Kansas City and Minneapolis.

  • Wheat futures continue to take their cue from neighboring pits. Thus, pressure on corn and beans has led to some light profit-taking in wheat.
  • Also, weekly exports sales of 293,600 MT for 2012-13 and 94,300 MT for 2013-14 were within expectations but the total was well below the week prior.
  • But a little-changed drought profile for the Southern and Central Plains continues to limit the market's downside risk, especially considering the record-low condition rating of the winter wheat crop when it entered dormancy.
  • Ukraine's ag ministry is reportedly urging exporters to halt wheat exports and refrain from additional exports as it could violate the current agreement agreement. This is also limiting selling pressure.
  • Also, Russia's deputy prime minister is expected to discuss lifting its grain import duty tomorrow.

 

Live cattle futures are enjoying slight gains this morning, while feeder cattle futures are mostly moderately higher.

  • Traders are working to ready positions of tomorrow's semiannual Cattle Inventory Report, which is expected to show all cattle and calves at 98.2% of year-ago levels and the annual calf crop at 97.9% of last year.
  • Cash cattle trade is thought to be largely complete on the Southern Plains after sales at $2 to $3 higher prices of $125 yesterday. Trade has not yet gotten started at northern locations, however. The travel-disrupting storm event will likely lead to firmer trade there.
  • But buying interest is being limited by the ongoing slide in boxed beef prices. Choice boxed beef values slid 13 cents and Select fell 8 cents yesterday. This did encourage strong movement of 246 loads, however.
  • Weekly boxed beef exports also fell compared to recent weeks to just 12,100 MT.
  • Weakness in the corn market is providing feeder cattle futures a lift.

 

Lean hog futures are posting slight gains, with the exception of the May contract, which is slightly lower.

  • Cash hog bids are steady to firmer this morning as some packers are still working to secure supplies for Saturday's kill after two winter storm events in the Midwest disrupted transportation this week.
  • Bitter cold temps in the western Corn Belt could make producers reluctant to transport hogs today, too.
  • But countering this was a slide in the pork cutout market yesterday that pulled margins back solidly into the red after they had improved to near breakeven yesterday.
  • The February contract still holds a discount to the cash hog index, but as the index has slid recently and the discount is slight, this has provided just limited support.
     
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