Market Snapshot, 8:30 am CT (VIP) -- February 19, 2013

February 19, 2013 02:42 AM
 

Corn futures are narrowly mixed, with pressure limited by strength in the soybean market.

  • Without fresh demand news to digest, upside potential in the corn market is being limited to spillover from sharp gains in the soybean market.
  • Disappointing weekend rains across Argentina are also helping to limit pressure on corn, although traders are more concerned with the soybean crop.
  • Gulf corn basis is steady this morning, which signals there's no fresh demand news on the horizon.

 

Soybean futures are 11 to 22 cents higher, with old-crop contracts leading gains.

  • Soybean futures are being supported by disappointing weekend rains in Argentina, although there are more rains in the forecast later this week.
  • Additional support is coming from news China purchased 120,000 MT of U.S. soybeans for 2012-13.
  • Also supportive are concerns that labor groups at various Brazilian ports are about to begin their annual work stoppages. While these events are usually short-lived, a slowing Brazilian economy could lengthen negotiations.
  • Gulf soybean basis is steady to 1 cent higher for immediate delivery at 76 cents over March futures.
  • A high-range close today would suggest a near-term low has been posted.

 

Wheat futures are favoring a firmer tone, although far-deferred futures at mixed at all three locations.

  • Wheat has largely been following corn futures this morning, which has led to choppy trade. Strength in the soybean market is limiting pressure.
  • Limiting buying in wheat is news India is considering allowing private companies to export to up to 5 MMT from government stocks due to expectations of a large crop there.
  • Lackluster demand remains on traders' minds, which is keeping wheat in a follower's role.
  • The forecast winter storm that is expected to build in the western Corn Belt tomorrow is expected to miss the bulk of the HRW wheat country.

 

Live cattle futures are called to open steady to firmer on short-covering and weather concerns.

  • Live cattle futures are expected to see a boost this morning from ideas recent losses are overdone, as the market is due for a round of short-covering.
  • Additional support is expected ahead of the winter storm that is forecast to hit the western Corn Belt beginning tomorrow night. Cold temps today are also stressing animal.
  • But limiting upside potential are demand concerns. Until the boxed beef market signals a low has been posted, futures will struggle to find more than short-covering support.
  • This week's cattle showlist is up slightly from last week, which gives packers the upper hand in this week's cash negotiations.

 

Lean hog futures are called mixed, with pressure on nearby contracts limited by oversold conditions.

  • Futures are expected to see a choppy start to the week, with pressure limited by concerns about winter weather later this week.
  • Still, traders are hesitant to rebuild long positions due to ongoing weakness in the pork cutout market.
  • The cash hog market is steady to $1 lower this morning as packers' focus is on improving sharply negative cutting margins.
  • April lean hog futures are trading at more than a $3 discount to the cash index and are oversold according to the 9-day Relative Strength Index. The contract is due for a corrective bounce, but attitudes will remain negative until the pork product market posts a low.
     
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