Market Snapshot, 8:30 am CT (VIP) -- February 11, 2013

February 11, 2013 02:43 AM
 

Corn futures are trading 1 to 3 cents lower.

  • Corn has modestly trimmed earlier losses, but remains weaker on followthrough from Friday's losses and spillover from soybeans.
  • Areas of central Argentine got scattered rains over the weekend, but the developing and pollinating crop remains stressed by dry conditions. Very little rain is in the near-term forecast through Friday, which is limiting selling interest.
  • But USDA's February Supply & Demand Report, which reminded the market of demand destruction, is limiting buying interest.
  • March corn has completed a 62% retracement of the rally from the January low to the early February high.

 

Soybean futures have modestly trimmed earlier losses, but are still posting double-digit losses on improved South American weather.

  • Soybean futures have moved off earlier lows, but remain under pressure after some beneficial showers were seen across Rio Grande do Sul, Brazil, over the weekend.
  • Forecasters say weather models support additional showers across southern Brazil, but there's little rain in the forecast for Argentina through Friday.
  • Gulf soybeans basis is 2 cents firmer for immediate delivery to stand 77 cents over March futures. This hints of fresh demand, but could also be a reflection of the tight supply situation.
  • Traders look for Brazilian beans to hit the ports soon, taking pressure off the U.S. to supply China with soybeans.

 

Wheat futures at all three exchanges are mostly 1 to 3 cents lower on spillover from neighboring markets.

  • Followthrough from Friday's losses and spillover from neighboring markets is weighing on wheat futures this morning.
  • Traders viewed Friday's reports as neutral, but say a fresh dose of demand news is needed to help secure a near-term low as there's no sign U.S. wheat is consistently competitive on the global market.
  • Outside markets are contributing to the weaker tone. The U.S. dollar index is firmer and gold is sharply lower and crude oil is slightly lower.

 

Live cattle futures are called to open weaker due to concerns about beef demand.

  • Choice boxed beef values slipped $1.34 and Select fell $1.51 on Friday, but movement was strong last week. Weakness in the boxed beef market raises concerns about the health of beef demand.
  • But traders anticipate a seasonal rise in the product market could get underway at any time.
  • With packer margins deep in the red, they are hesitant to raise bids, raising expectations for cash negotiations to extend deep into this week.
  • Weakness in the corn market should help limit pressure on feeder cattle futures and could even encourage some short-covering.

 

Lean hog futures are expected to see a mixed start amid spreading.

  • Nearby lean hog futures are due for some short-covering given the steep discount they hold to the cash index. February lean hog futures need to narrow the discount ahead of Thursday's expiration.
  • Meanwhile, traders will be watching for signs the pork product market is working on a seasonal low, especially since packer margins remain deep in the red.
  • Due to negative margins, the cash hog market is called steady to mostly lower.
  • Deferred futures could benefit from strength in nearby contracts, but are expected to be weaker this morning amid bull spreading.
     
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