Market Snapshot, 8:30 am CT (VIP) -- February 15, 2013

February 15, 2013 02:43 AM
 

Corn futures are 3 to 7 cents higher on short-covering.

  • Ideas this week's losses are overdone is encouraging of short-covering in corn futures this morning.
  • But upside potential is being limited by sharp weakness in crude oil and gold futures, although the dollar index is only mildly firmer.
  • Traders are keeping a close eye on Gulf corn basis, which has upticked recently, as this could be a signal corn has found "value." Gulf basis is steady this morning for immediate delivery.
  • But corn futures have a lot of ground to make up in order to return control to market bulls.

 

Soybean futures are 1 to 6 cents higher, with nearbys leading gains.

  • Soybean futures are generally benefiting from short-covering, but they did harness gains after USDA announced soybean sales cancellations of 250,000 MT to unknown destinations (likely China) for 2012-13.
  • Upside potential is also being limited by improvements in the weather pattern for Argentina and southern Brazil, as these regions have benefited from rains for the filling crop this week.
  • Soybean futures are still working on weekly losses after Monday's gap-lower start. Due to the extended holiday weekend (markets are closed Monday for Presidents Day), traders are working to limit risk.

 

Wheat futures are 6 to 9 cents higher on short-covering and fresh demand news.

  • Wheat is seeing spillover from neighboring pits as well as short-covering on ideas recent losses were overdone.
  • Additional support is coming from news Brazil purchased 100,000 MT of U.S. HRW wheat and Japan purchased 61,568 MT of U.S. wheat.
  • These purchases could signal U.S. wheat is once again competitive on the global market, but more export buying is needed to aid in a price recovery in the wheat pit.
  • Traders are also evening positions ahead of the extended holiday weekend, as the markets are closed on Monday for Presidents Day.

 

Cattle futures are expected to see a choppy start, although some contracts may favor a firmer tone on followthrough from yesterday's late-session recovery.

  • Many live and feeder cattle contracts posted bullish reversals yesterday. Followthrough buying this morning would signal the market is working on a near-term low.
  • But before rebuilding long positions, cattle traders want to see improvement in demand.
  • Boxed beef movement has been varied this week and prices have been choppy. Traders are waiting on the market to post a seasonal rebound before rebuilding long positions.
  • Cash cattle trade this week was largely completed at $123, which is down $2 from last week. February live cattle ended yesterday at around a $3 premium to the cash market, which signals traders believe the downside has been overdone.

 

Lean hog futures are expected to see a mixed start amid short-covering.

  • Pressure on lean hog futures should be limited this morning as futures have dipped into oversold territory according to the Relative Strength Index.
  • But buying will be limited to short-covering as traders have a negative bias toward the cash hog market.
  • However, given that the markets are closed on Monday, traders' focus will be on evening positions and limiting exposure (short or long).
  • The cash hog market is called steady to mostly lower again today as packers work on improving profit margins. Pork cutout values firmed slightly yesterday, but not enough to pull margins back into the black.
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