Market Snapshot, 8:30 am CT (VIP) -- February 21, 2013

February 21, 2013 02:41 AM
 

Corn futures are 3 to 5 cents lower on strength in the dollar index.

  • Strength in the U.S. dollar index on indications from the FOMC that the Fed could begin backing off from its quantitative easing actions is pressuring grain futures this morning.
  • Traders are also talking about this morning's presentation by USDA Chief Economist Joseph Glauber at the USDA Agricultural Outlook Forum, in which he projected the average price of corn for 2013-14 at $4.80, which is lower than baseline projections released last week.
  • Glauber also projected 2013 planted corn acres at 96.5 million, which if realized, would be lower than the 97.2 million planted in 2012.
  • Also this morning, the Climate Prediction Center updated its Seasonal Drought Outlook, in which is reveals the potential for drought improvement across the central Corn Belt, although drought is expected to persist from Nebraska southward.

 

Soybean futures are fractionally to 7 cents lower in all but the front-month March contract, which has firmed to just above unchanged.

  • Soybean futures have favored a weaker tone so far this morning due to strength in the dollar.
  • But March soybeans have firmed on concerns the potential for docker worker strikes in Brazil could slow Brazilian soybean exports.
  • Traders are also taking note of Glauber's presentation this morning, in which he projected the average 2013-14 soybean price at $10.50, which is lower than last week's baseline projection released by USDA.
  • Glauber projected planted soybean acres in 2013 at 77.5 million, which if realized, would be up just marginally from 77.2 million in 2012.
  • Also this morning, USDA announced a 130,450 MT soybean sale to an unknown destination, with 75,450 MT for 2012-13 and 55,000 MT for 2013-14.

 

Wheat futures are mostly 5 to 7 cents lower on strength in the dollar and spillover from corn.

  • The U.S. dollar index has moved to its highest level since early September, which is weighing on the commodity complex this morning.
  • Although USDA's announcement of an 110,000 MT export sale of soft red winter wheat for delivery to unknown destinations is a positive demand development. Of the total 55,000 MT is for 2012-13 and 55,000 MT is for 2013-14.
  • USDA's Glauber projected planted 2013 wheat acreage at 56 million, which if realized would be up just slightly from 55.7 million in 2012.
  • This morning's Seasonal Drought Outlook reveals little hope of drought improvement across the Southern Plains this spring. But recent precip through the region has temporarily eased HRW crop concerns.

 

Live and feeder cattle futures are called to open steady to higher on short-covering.

  • Following recent sharp losses, live and feeder cattle futures are expected to benefit from short-covering.
  • However, upside potential will be limited by demand concerns. Traders are concerned about possible meat inspector furloughs and slowed export demand.
  • Outside markets may also limit buying as the U.S. dollar is firmer, while commodities are generally weaker and the stock market is under light pressure.
  • Cash cattle trade began yesterday at steady money with last week's $123 trade. February live cattle still hold a premium to that level, which will also limit buying to short-covering.
  • Weakness in the corn market is also supportive for feeder futures this morning.

 

Lean hog futures are called mixed, with buying limited by weakness in the cash hog market.

  • Futures are due for a bounce to correct the oversold condition of the market, but buying will be limited to short-covering due to concerns about the cash hog market.
  • News yesterday that China is considering testing imports for ractopamine raised concerns about export demand, as China is a top customer of U.S. pork.
  • Meanwhile, the cash hog market is expected to be steady to weaker today as packers work to get cutting margins back into the black.
     
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