Market Snapshot, 8:30 am CT (VIP) -- February 14, 2013

February 14, 2013 02:45 AM
 

Corn futures are 2 to 3 cents lower on spillover from soybeans.

  • Corn was choppy in overnight trade but is favoring a weaker tone this morning on spillover from soybeans.
  • This morning's weekly export sales data showed corn sales of 225,400 MT for 2012-13 and 59,300 MT for 2013-14, which was within expectation and an improvement from last week.
  • But traders need to see a steady stream of export sales to signal the corn market has reached a level that importers view as a "value buy."
  • Gulf corn basis is 5 cents stronger for immediate shipment at 63 cents over March futures, which hints that export demand has improved, but it is also a reflection of the tight supply situation that is well known.

 

Soybean futures are 7 to 15 cents lower, with nearbys leading losses.

  • Strength in the dollar index on news the euro-zone recession has deepened is resulting in a risk-off atmosphere in the grain markets, although gold and crude oil are firmer.
  • Additional pressure comes from disappointing weekly export sales. Net sales reductions of 109,200 MT for 2012-13 were offset by sales of 345,000 MT for 2013-14.
  • March soybean futures are testing support at yesterday's low of $14.07 1/4. Slipping below this level and the psychological $14.00 level could spur sell stops and deepen the downside correction.
  • Gulf soybean basis is 1 cent softer for immediately delivery this morning which reflects a slowdown in demand.

 

Chicago wheat is mostly 1 to 2 cents lower, while Kansas City and Minneapolis wheat are mixed.

  • Chicago wheat is being pressured by spillover from corn and strength in the U.S. dollar index.
  • But pressure is being limited by this morning's weekly export sales data, that showed sales of 651,700 MT for 2012-13 and sales of 54,600 MT for 2013-14 -- coming in above expectations.
  • Stronger-than-expected weekly export sales have spurred ideas U.S. wheat is once again competitive on the global market, although traders will want to see more sales for confirmation.
  • Strategie Grains lowered its 2013 EU (including Croatia) wheat production forecast by 1.1 MMT to 132.2 MMT due to lower planted acreage in Britain and France.

 

Live cattle futures are called to open mixed as traders wait on active cash cattle trade to develop.

  • After light cash cattle trade at $123 in the Central and Southern Plains earlier this week, remaining feedlots are reluctant to sell cattle at lower prices. This has raised the possibility of remaining cattle trading at steady with last week's $125 trade.
  • Boxed beef values were slightly firmer yesterday on strong movement of 215 loads, but prices need to continue firming to signal a seasonal low has been struck.
  • But upside potential will be limited by concerns about a possible meat inspector furlough beginning March 1 and its impact on the packing industry.
  • A weaker tone in the corn market should help limit price pressure in feeder cattle futures. Also, March feeder futures are trading at around a $2 discount to the cash index and are oversold according to the 9-day Relative Strength Index.

 

Lean hog futures are called lower on sharp weakness in the pork cutout market.

  • Pork cutout values plunged $2.68 yesterday, but movement was strong at 103.5 loads. Sharp losses in ham and loin values were behind the price decline.
  • As a result of sharp price pressure on pork values, packers saw profit margins slip back to deep-in-the-red levels, which will weigh on the cash market today.
  • Pressure on nearby futures should be limited by the $1.50 discount (as of yesterday's close) that February lean hog futures -- which expire at noon CT today -- hold to the cash index.
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