Market Snapshot, 8:30 am CT (VIP) -- February 5, 2013

February 5, 2013 02:41 AM
 

Corn futures have softened to trade 2 to 5 cents lower ahead of the start of open-outcry trade.

  • Corn has favored a weaker tone so far this morning, but have extended losses due to a strengthening U.S. dollar index and a lack of fresh news.
  • Adding to the softer tone is a weakening of Gulf corn basis, which is down a penny for nearby delivery, although it is at still-lofty levels. Basis for immediate shipment is 57 cents above March futures.
  • While March corn futures have slipped below support at yesterday's low, no serious technical chart damage has been done yet as the contract remains well within the boundaries of the month-long consolidation range.

 

Soybean futures have moved to fresh session lows to trade mostly 5 to 9 cents lower after a firmer start to the overnight session.

  • Early gains have given way to profit-taking in the soybean market, although pressure so far has been limited as traders remain concerned about the near-term hot and dry pattern that continues across southern Brazil.
  • Strength in the dollar is adding to profit-taking in soybean futures, although crude oil and gold futures are higher.
  • March soybean futures are pivoting around $14.80 this morning, which remains within the boundaries of the uptrend established from the January low.

 

Wheat futures at all three exchanges are mostly 1 to 3 cents lower on spillover from neighboring pits.

  • Wheat is softer this morning on spillover from neighboring pits as well as strength in the dollar index.
  • Additional pressure is coming from news India is looking for a way to increase wheat exports as its government-owned reserves are more than three times the minimum requirement.
  • Also this morning, Reuters is reporting Russian officials have decided to lift the 5% duty on grain imports until mid-summer following a government meeting on the grain situation.
  • Meanwhile, Statistics Canada reports wheat stocks at the end of December of 20.7 MMT were lower than traders' expected and 0.7% lower than the previous year.

 

Live cattle futures are called to open mixed as traders wait on cash trade to develop.

  • Live cattle ended higher in all but the front-month contract yesterday in reaction to the Cattle Inventory Report that reflected a tightening supply situation.
  • Traders are now watching to see if the beef market can work higher in order to improve packers' profit margins, which are deep in the red after beef values softened sharply the past two weeks.
  • Boxed beef values firmed marginally yesterday, but movement has improved to signal prices may have dipped low enough.
  • This week's cattle showlist is up slightly from last week, which could make it difficult for feedlots to build on last week's higher cash cattle trade.

 

Lean hog futures are called to open mixed, with pressure limited by tightening supplies.

  • Lean hog futures are expected to be pulled by followthrough from yesterday's losses and tightening supplies, resulting in a choppy start to the day.
  • Traders are discouraged by a softening in the pork cutout market, as values slipped $1.03 yesterday to keep packers' profit margins deep in the red.
  • However, cash sources say packers are short bought and will be forced to raise bids to attract enough animals to town.
  • February lean hog futures are trading in line with the cash index, which should limit the contract's price move today.
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