Market Snapshot, 8:30 am CT (VIP) -- February 25, 2013

February 25, 2013 02:48 AM
 

Corn futures are marginally to 2 cents lower, with pressure limited by weakness in the dollar index.

  • Corn has seen two-sided trade, with periods of support coming on spillover from dollar weakness. But expectations for a large 2014 crop are weighing on new-crop futures.
  • Traders have pushed fresh demand news to the backburner; USDA announced a 127,000 MT corn sale to an unknown destination this morning. Of the total, 50,800 MTY is for 2012-13 and 76,200 MT is for 2013-14.
  • While the demand news suggests prices have returned to more attractive levels, traders say a continued pick up in demand is needed to lift futures.
  • Gulf corn basis is 1 cent firmer for immediate delivery and 3 cents weaker for May delivery.

 

Soybean futures are narrowly mixed with a downside bias. Buying is being limited by global economic concerns.

  • The dollar index has weakened considerably after firmer trade earlier. Investors are nervous as they wait for clues as to whether lawmakers will reach a compromise before the March 1 sequester deadline.
  • News that China purchased 120,000 MT of soybeans for 2013-14 has not received a lot of attention this morning, although traders are nervous about shipping delays in Brazil that could keep the U.S. export window open longer than usual.
  • This morning AgRural trimmed its Brazilian bean crop estimate by 1 MMT to 82.2 MMT due to a lack of rain in Bahia.
  • Meanwhile, scattered rains were seen over the weekend across dry areas of Argentina, with more on the way to central Argentina this week to aid with pod fill. Scattered rains in southern Brazil are also in the forecast.

 

Wheat futures are 2 to 6 cents lower on forecasts for more precip in the Plains.

  • Wheat futures are seeing pressure from another winter storm moving across the Central and Southern Plains that is providing much-needed precip.
  • While much more precip will be needed to rid the HRW wheat area of drought, recent precip makes it difficult to generate buying interest in wheat futures.
  • Otherwise, traders are keeping a close watch on neighboring pits for direction. A softer tone in corn and soybeans is also spilling over into the wheat pit.
  • More technical chart damage is being done this morning as May Chicago wheat has posted a new yearly low and is hovering around $7.10.

 

Live and feeder cattle futures are called to open mixed amid bull spreading.

  • Friday's Cattle on Feed Report showed On Feed in line with expectations at 94%, Placements above expectations at 102% and Marketings above expectations at 106% of year-ago levels. The report should promote bull spreading.
  • Also supportive for nearby futures is $2 higher cash cattle trade (compared to trade seen earlier in the week) in Kansas and Nebraska on Friday afternoon at $125.
  • Meanwhile, the Cold Storage Report showed beef stocks at the end of January slightly above expectations at 484.003 million lbs., although just below year-ago levels.
  • Weakness in the corn market could trigger some short-covering in feeder cattle futures.

 

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

  • Lean hog futures are expected to be choppy this morning amid spreading, with pressure on nearbys limited as April hogs are trading at around a $2 discount to the cash index.
  • However, the cash hog market is called steady to $1 lower amid lackluster demand for cash hogs as packers say they largely have early week needs secured.
  • Meanwhile, Friday's Cold Storage Report showed pork stocks at the end of January just below expectations at 605.266 million lbs., although this was 3.4% above year-ago levels.
  • The build in pork stocks compared to year-ago keeps demand concerns front-and-center in traders' minds.
  • Lean hog futures are sharply oversold according to the 9-day Relative Strength Index and are due for a corrective bounce.
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