Market Snapshot, 8:30 am CT (VIP) -- February 27, 2013

February 27, 2013 02:44 AM
 

Corn futures have seen little price movement so far this trading session but are slowly gaining upward momentum and trading marginally to 3 cents higher.

  • Improvement in country and Gulf basis levels helped to lift corn futures to a high-range close yesterday. This morning, Gulf corn basis is steady to a penny lower for near-term delivery and a penny firmer for April delivery.
  • March corn futures came within a penny of being in line with March Chicago wheat futures yesterday, but a widening of the spread is being seen today as wheat is leading price gains and providing spillover support to corn.
  • May corn futures need to return above $7.00 to suggest a near-term low is in the works; it needs to return above $7.20 to suggest bulls are gaining the near-term advantage.

 

Soybean futures were mixed much of the overnight session but bulls are gaining momentum and nearbys are now posting double-digit gains.

  • Weakness in the dollar index and fresh demand news is lifting soybean futures to fresh session highs ahead of the start of open-outcry trade.
  • Traders are reacting to USDA's announcement that China has purchased 120,000 MT of U.S. soybeans for 2013-14 and an unknown destination has purchased 120,000 MT of soybeans for 2012-13.
  • The old-crop soybean purchase is especially supportive as it suggests importers are growing impatient with shipping delays at South American ports.
  • But buying in new-crop futures is being limited by beneficial moisture that is improving soil moisture conditions across the western Corn Belt.

 

Wheat futures are mostly 7 to 8 cents higher to widen spreads with corn.

  • Wheat was the upside price leader for much of the overnight session until buying improved in soybean futures.
  • Traders are working to widen the wheat/corn spread that has narrowed considerably.
  • Egypt has signaled it has 2.3 MMT of wheat in strategic reserves -- a 95-day supply. It also says despite its rough financial and political state, it has priority financing for wheat imports.
  • And Russia's ag ministry says it plans to start buying grain from producers in August or September to replenish its intervention stocks. The head of Russia's grain production lobby says market grain supplies will remain tight through 2013-14.

 

Live cattle futures are expected to see a lift on followthrough from yesterday's gains, with feeders expected weaker due to strength in the corn market.

  • Live cattle futures are expected to enjoy followthrough from yesterday's gains as well as support from strength in the boxed beef market.
  • Choice beef values improved $1.42 and Select rose $2.43 yesterday on decent (although lower than in recent weeks) movement of 166 loads.
  • This week's showlists are tighter and the snowstorm across the Plains has likely further tightened available supplies and is expected to force packers to raise bids.
  • Meanwhile, a firmer tone in the corn market is expected to weigh on feeder cattle futures this morning.

 

Lean hog futures are expected to see a choppy start but could build on yesterday's mostly firmer tone.

  • Lean hog futures could benefit from short-covering on ideas the downside has been overdone, but buying will be limited to corrective buying due to concerns about the cash hog market.
  • Despite poor travel conditions across areas of the Corn Belt this morning that will disrupt hog marketings, the cash hog market is expected to be mostly steady to weaker today as packers say they largely have this week's needs secured.
  • Traders also say they want confirmation the pork market has posted a seasonal low before aggressively rebuilding long positions. Pork cutout values slipped 26 cents yesterday, which keeps demand concerns on traders' minds.
  • April lean hog futures are trading in line with the cash index, which could result in lackluster trade.
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