Market Snapshot, 8:30 am CT (VIP) -- February 22, 2013

February 22, 2013 02:50 AM
 

Corn futures are 1 to 3 cents higher on short-covering and help from soybeans.

  • Following yesterday's late-session decline, corn futures are enjoying short-covering as traders even positions ahead of the weekend. Double-digit gains in soybean futures are also encouraging light corrective buying.
  • Also positive for the corn market this morning is the weekly export sales data that showed corn sales of 361,800 MT for 2012-13 and 20,100 MT for 2013-14, which above expectations. Plus, Reuters reports Chinese feed mills have booked four cargoes (240,000 MT) of U.S. corn for 2013-14 this week.
  • The increase in sales signals corn prices have returned to a level that attracts demand and also explains recent improvement in Gulf corn basis.
  • This morning, Gulf corn basis is down a penny for immediate delivery, but up a penny for March delivery and up 7 cents for April delivery.
  • But also this morning, traders continue to digest news from USDA's Outlook Forum. USDA said its 14.35 billion bu. 2013 corn production projection is based on a yield of 163.6 bu. per acre and pegs carryover at a hefty 2.177 billion bushels.

 

Soybean futures are 13 to 17 cents higher on followthrough from yesterday's gains and ongoing strong demand.

  • Futures continue to be supported by expectations the window of opportunity for U.S. soybean exports will be opened a bit longer due to shipping delays in Brazil. Reuters reports Chinese importers have booked at least nine cargoes of old-crop U.S. beans this week, with some of that business switched from Brazil and some new purchases.
  • But this morning's weekly export sales report is a disappointment, with net sales reductions of 119,500 MT for 2012-13 a new marketing year low. Sales of 62,000 MT were reported for 2013-14.
  • USDA also announced a 410,000 MT soybean sale to China, with 60,000 MT for 2012-13 and 350,000 MT for 2013-14.
  • The improved technical performance is building on itself in the soybean pit, with May beans posting a fresh monthly high this morning and coming within 3 cents of the key $15.00 level.
  • Traders are also digesting news from USDA's Outlook Forum, as they have provided more details on their initial look at the 2013-14 marketing year. USDA said its 3.405 billion bu. crop is based on a yield of 44.5 bu. per acre and pegs carryover at 250 million bushels.

 

Wheat futures are trading 3 to 7 cents higher with Minneapolis contracts leading gains.

  • Wheat has a lot of work ahead in order to turn the negative technical picture around, but is seeing a boost this morning from ideas this week's losses are overdone.
  • Adding to those thoughts is this morning's weekly export sales data that signals importers view U.S. prices are more attractive. The report showed sales of 699,300 MT for 2012-13 and 56,600 MT for 2013-14 -- coming well above expectations.
  • Traders are also digesting more details of the 2013-14 marketing year from USDA's Outlook Forum. USDA says planted wheat acreage of 56.0 million and a yield of 45.2 bu. per acre will produce a crop of 2.1 billion bu. and pegs carryover at 639 million bushels.

 

Live and feeder cattle futures are called to open mixed as traders even positions ahead of the Cattle on Feed Report.

  • Some stabilization in futures is expected today as traders even positions ahead of the weekend and prior to this afternoon's Cattle on Feed Report.
  • The report is expected to show On Feed at 93.8%, Placements at 100.3% and Marketings at 104.7% of year-ago levels.
  • Meanwhile, cash cattle trade is thought to be complete at $123 this week, which is steady with last week. February live cattle, however, are trading at around a $2 premium to the cash market.
  • Strength in the corn market will limit buying in feeder cattle to short-covering.

 

Lean hog futures are called mixed on the possibility of short-covering.

  • Following this week's sharp losses, lean hog futures are due for a corrective bounce as the market is severely oversold according to the 9-day Relative Strength Index.
  • But weakness in the cash hog market and concerns about domestic and export demand have been traders' focus this week.
  • The cash hog market is called steady to $1 lower again today as the pork cutout market has shown no sign a near-term low has been posted. The good news is packers' profit margins have returned to the black, but demand for cash hogs remains lackluster.
  • Traders will also be focused on evening positions ahead of this afternoon's Cold Storage Report, which is expected to show pork stocks at 608.2 million lbs. -- just shy of the January 2009 record.
     
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