Market Snapshot, 8:30 am CT (VIP) -- February 1, 2013

February 1, 2013 02:54 AM
 

Corn futures are 2 to 3 cents higher on spillover from soybeans and positive outside markets.

  • A weaker U.S. dollar index is supportive of commodity buying this morning. This morning's employment report showed the economy added 157,000 non-farm payrolls in December, which came in about as expected, but still isn't robust enough to lower the unemployment rate. In fact, the rate ticked up to 7.9%.
  • While rains provided some relief to areas of Argentina yesterday, the coverage wasn't as widespread as earlier believed. Some lingering showers are still in the area today, but dry conditions are expected to return stress to the crop.
  • Corn futures are working on strong weekly gains and have started February on solid footing. But nearby futures soon face tough resistance at the December highs. March corn is trading above the key 100-day moving average.

 

Soybean futures are 4 to 14 cents higher, with nearbys leading gains.

  • Soybeans are seeing a boost from concerns about the coverage of yesterday's rain event in Argentina, especially since dry conditions are expected to resume into at least the middle of next week.
  • Meanwhile, conditions have remained dry in Parana and Rio Grande do Sul, Brazil, which is stressing the filling crop.
  • A weaker U.S. dollar index is also supportive of commodity buying, although the dollar has moved well off its earlier low. Soybean futures are working on strong weekly gains and appear headed for a test of the December highs.

 

Chicago and Kansas City wheat futures are mostly 1 to 4 cents higher, with Minneapolis posting marginally gains.

  • Wheat remains in a follower's role to corn and soybeans, but hasn't posted as strong of a weekly rally as neighboring pits due to a lack of fresh news.
  • A weaker U.S. dollar index is also supportive for the wheat market this morning, but traders are still waiting on consistent, strong export demand to signal U.S. wheat prices are competitive on the global market.
  • While gold is sharply higher, crude oil has weakened, which provides mixed signals to commodity traders.

 

Live and feeder cattle futures are called to open higher ahead of this afternoon's Cattle Inventory Report.

  • Traders' focus will be on evening positions ahead of this afternoon's Cattle Inventory Report, which will provide a reminder of the tightening supply situation.
  • The report is expected to show all cattle and calves at 98.2%, which, if realized, would represent the smallest U.S. herd since 1952.
  • Traders also expect the report to show that producers have not yet begun rebuilding herds, with beef and dairy replacement heifers seen at 99.6% and 99.2% of year-ago, respectively.
  • Meanwhile, the beef market continues to weaken, with Choice values down $1.44 and Select down 77 cents yesterday on strong movement of 227 loads.
  • Cash cattle trade occurred earlier this week at $125, which was up $2 to $3 from last week, but not as strong as traders expected.

 

Lean hog futures are called mixed, with buying limited by concerns about the pork market.

  • Price action in the hog pit is expected to be choppy as traders weigh tightening market-ready supplies against declining packer profit margins.
  • Pork cutout values slipped 42 cents yesterday to push packers' margins deep into the red. But pork movement improved to over 134 loads, which traders believe signifies a boost in demand.
  • However, the cash hog market is called steady to possibly firmer as packers work to fill tomorrow's kill. Frigid temps have made it more difficult for packers to secure this week's needs.
  • February lean hog futures are trading at a small discount to the cash index, which should help to limit pressure on futures this morning.
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