Market Snapshot, 10:00 a.m. CT (VIP) -- Advice -- January 27, 2014

January 27, 2014 03:56 AM
 

Cotton producers: Increase 2013-crop cash sales, make initial 2014-crop sale... Cotton futures are rolling over after an extended price recovery. Therefore, it's time to reward the rally with sales. Hedgers and cash-only marketers are advised to make a 25% 2013-crop cash sale to get to 75% priced on old-crop. Hedgers and cash-only marketers are also advised to sell the first 25% of expected 2014-crop production via cash forward contract for harvest delivery.

Corn futures are mixed with nearbys favoring the downside.

  • Corn futures have seen trade on either side of unchanged as fresh news is lacking today.
  • Light support is coming from USDA's announced sale of 119,888 MT to an unknown destination for 2013-14.
  • News out of Argentina is mixed as temps are forecast to rise again this week, but last week's rains eased stress on the corn crop. As a result, trader concerns over that country's crop is limited.
  • Gulf corn basis is steady this morning, which suggests no supportive export news on the horizon but no sales resistance either.

 

Soybean futures have softened to post losses of 2 to 5 cents.

  • Early gains in nearby bean contracts have given way to profit-taking.
  • March futures were initially supported by traders' efforts to prepare for today's weekly export sales report. These reports have continued to show strong demand for U.S. soybeans, with China still a strong buyer.
  • In addition, USDA announced an 183,000 MT soybean sale to an unknown destination for 2014-15.
  • Also, news China's Ministry of Commerce has raised its January soybean import forecast (again) to 5.27 MMT from 4.61 MMT is supportive. The ministry expects imports to slip to 3.42 MMT in February.
  • However, traders note Brazil's shipping agent SA Commodities reports the country will ship a record 2.5 MMT of soybeans in February. This suggests the nation may not experience the shipping problems it had last year. This could also lead to cancellations of U.S. sales, which is weighing on deferred contracts.
  • Gulf soybean basis is steady this morning.

 

Early gains in the wheat market have given way to profit-taking. SRW and HRW wheat are posting losses around 1 to 3 cents, while HRS wheat is 2 to 5 cents lower in nearbys and mixed in deferred months.

  • Wheat futures were initially lifted about the possibility of winterkill of the HRW and SRW crops due to the arctic temperatures across the Plains and Midwest. However, such talk provides only limited support as the extent of the damage will not be known until the crop comes out of dormancy this spring.
  • The market is also lacking guidance from outside markets this morning. The market is focused on preparations for this week's FOMC meeting.
  • Gulf SRW and HRW wheat basis is steady this morning.

 

Live cattle futures are slightly to moderately lower in reaction to Friday's Cattle on Feed (COF) Report. Feeder cattle futures are mostly moderately lower.

  • Live cattle futures are under pressure from Friday's COF Report, which saw On Feed and Placements numbers higher than expected and Marketings lighter than expected.
  • Traders looking at the 1% rise in Placements believe the boost in numbers is due to more calves moving into U.S. from both Canada and Mexico. That is somewhat negative for feeder cattle futures.
  • Traders are also concerned a potential top may be in the making in wholesale beef prices. Choice beef values fell $1.29 on Friday and Select slipped 68 cents.
  • The intense cold across the Plains and Midwest continues to stress cattle in feedlots and could also help limit pressure to profit-taking.
  • Feeder cattle futures are lower in reaction to the Cattle on Feed Report and slightly higher corn futures.

 

Lean hog futures are mixed in light, early trade.

  • Futures are seeing some spillover pressure from live cattle futures.
  • But intense cold and difficult travel across the Corn Belt are limiting supplies. Some packers are closed or are reducing hours today.
  • As a result, cash trade will be limited today. But traders look for packer demand to build as work flows return to normal, which could support cash prices the rest of the week.
  • Futures are gaining light support from Friday's wholesale pork trade. The pork cutout rose 17 cents, but movement was a slow 276.7 loads.
  • February lean hog futures hold around a $5 premium to the cash index, which is also a limiting factor for nearby futures to start the week.
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