Market Snapshot, 10:00 CT (VIP) -- January 4, 2013

January 4, 2013 04:01 AM
 

 

 

Corn futures have softened slightly to trade roughly 2 to 9 cents lower, with nearbys seeing the lightest losses.

  • Highly disappointing weekly export sales of 49,100 MT for the week ended Dec. 27 is weighing on the corn market.
  • Also reminding traders of lackluster export demand is 1 to 2 cent lower Gulf basis levels for February and March delivery this morning.
  • Strength in the U.S. dollar index today and chart damage this week is also giving traders incentive to book profits to wrap up the week.
  • Traders are again watching the 200-day moving average, as March futures have been flirting with this key level of support this week. Penetration of it could encourage heavy fund selling. It intersects at $6.84 1/4 today.

 

Soybean futures softened with the open of pit trading and are now posting losses in the teens to 20s.

  • Traders are focusing on removing risk to wrap up the week as they are worried that strong Chinese export demand for U.S. beans will fade as Brazilian supplies hit the market.
  • Weather in South America has generally been favorable and is expected to remain so, upping the odds for a record-large bean crop.
  • This morning's weekly export sales tally of 434,900 MT for the current marketing year and 61,400 MT for 2013-14 came in above expectations. But this tally is relatively low compared with tallies seen for much of 2012, and it included some recent order cancellations.
  • Heavy losses in the soymeal market as traders continue to unwind long soymeal/short soyoil futures spreads due to the fiscal cliff package including a biodiesel tax credit adds additional pressure to the soybean market.
  • Futures appear headed for a test of the November lows.

 

Wheat futures have softened. Chicago wheat is mostly 5 cents lower and Minneapolis and Kansas City are seeing slightly lighter losses.

  • This morning's weekly export sales data showed sales of 434,900 MT for the current marketing year, which came within traders' expectations. This solid tally that helped wheat exports to gain on last year's export pace is limiting losses.
  • But other fundamental news is largely lacking, leaving Chicago wheat to follow corn's lead.
  • Heavy spillover pressure from soybeans is also making it difficult for wheat to find buyers.
  • Buying interest in the wheat market is also being limited by the possibility of precip for the Southern and Central Plains next week thanks to a developing storm.

 

Live cattle futures are off to a choppy start. Feeder cattle futures are enjoying slight to moderate gains.

  • Cattle futures are choppy this morning as some are engaging in light followthrough buying in anticipation of higher cash trade, while others are taking advantage of dollar strength by booking profits to wrap up the week.
  • Also limiting buying enthusiasm is the fact that nearby futures are already at a sharp premium to the cash market.
  • Cash trade is expected to get underway at firmer prices as packers are thought to be in need of supplies for next week's slaughter and the boxed beef market has delivered a strong performance this week.
  • Yesterday, Choice values rose 97 cents and Select cuts firmed 66 cents; movement was also solid at 211 loads.
  • Also limiting buying interest is a pullback in weekly beef export sales for the week ended Dec. 27. Sales of 8,400 MT for 2012 and 1,300 MT for 2013 were down sharply from last week's total of 23,700 MT.
  • Feeder cattle futures are benefiting from weakness in the corn market.

 

Lean hog futures are enjoying slight to moderate gains in all but far deferred months, which are mixed.

  • Yesterday, the pork cutout value surged $1.71 and movement was impressive at 144.46.
  • This improved packer profit margins, though most are still in the red. As a result, the cash hog market is mostly steady today.
  • Buying interest is also being limited by the premium nearby futures hold to the cash hog index, which was most recently projected up 28 cents to $82.67.
  • Strength in the U.S. dollar index will also keep buying interest in check to end the week.

 

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