Market Snapshot, 8:30 am CT (VIP) -- February 13, 2013

February 13, 2013 02:42 AM
 

Corn futures are 1 to 6 cents lower, with old-crop contracts leading losses amid bull spread unwinding.

  • March corn futures are seeing followthrough pressure after the contract closed below the psychological $7.00 level yesterday.
  • As a result of recent pressure, corn has moved into oversold territory according to the 9-day Relative Strength Index, which signals a time or price correction is due.
  • Corn has returned to levels that have sparked fresh demand in the past, but so far there are no indications that livestock producers have stepped up feed purchases or of fresh export demand.
  • Gulf corn basis is steady for nearby delivery, but is 2 cents higher for late-spring delivery.

 

Soybean futures have trimmed earlier losses, but are still trading 5 to 10 cents lower on followthrough from yesterday's losses.

  • The February break deepened overnight as soybean futures are working on their fourth straight day of sharp price losses.
  • As a result, futures have moved into oversold territory and are due for a corrective bounce, but with positive news lacking, there is more near-term downside price risk.
  • While forecasts that have promised rains in Argentina continue to disappoint, a more active weather pattern over Rio Grande do Sul, Brazil, has traders fully expecting a record South American bean crop.
  • Demand news is also lacking due to the Chinese new year celebration that has basically shut down global commerce to and from the country.

 

Wheat futures are mostly 1 to 3 cents lower on spillover pressure.

  • Wheat is weaker on spillover from neighboring markets, with weakness in the dollar index being ignored this morning.
  • Wheat needs a dose of fresh demand news, which has been lacking, to help secure a near-term low.
  • Some precip across the Southern Plains yesterday added to the negative market sentiment, but the region has a long ways to go to cure the long-term drought.
  • Adding to the negative tone this morning is news that FranceAgriMer has raised its forecast of 2012-13 soft wheat stocks to 2.42 MMT (up from 2.29 MMT). The agency says an expected drop in exports within the EU and lower domestic use were behind the boost in its stocks forecast.

 

Live cattle futures are called to open steady to lower as traders react to lower cash cattle trade.

  • While futures are due for some short-covering, followthrough from yesterday's weakness is expected in reaction to lower cash cattle trade.
  • Light cash cattle trade got underway yesterday at $123, which is down $2 from last week, and more volume at that price is expected today.
  • February live cattle are trading at around a $3 premium to the cash index, which raises the risk of additional near-term pressure.
  • Traders will continue to keep an eye on the boxed beef market, as it typically posts a seasonal low this time of year. Choice values improved 73 cents and Select rose 15 cents on light movement of 169 loads.
  • Weakness in the grain markets should limit pressure on feeder cattle futures.

 

Lean hog futures are called mixed, with nearby contracts firmer as traders work to narrow the discount those contracts hold to the cash index.

  • February lean hogs are trading at around a $2 discount to the cash index and the contract expires tomorrow at noon CT.
  • Meanwhile, concerns about pork demand are expected to weigh on deferred futures.
  • While pork prices rose 93 cents yesterday, the entire increase was due to higher ham prices, as all other cuts were lower.
  • The cash hog market is expected to be steady to softer again today as packers work to get profit margins out of the red.
     
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