Market Snapshot, 8:30 am CT (VIP) -- January 10, 2013

January 10, 2013 02:47 AM
 

Corn futures are mixed, with nearbys trading 1 to 2 cents higher.

  • Futures were stronger earlier in overnight trade, but softened on disappointing weekly export sales data.
  • Weekly corn sales of 12,600 MT for 2012-13 and net sales reductions of 11,600 MT for 2013-14 came in well under dismal expectations. Additionally, weekly exports of 106,800 MT were a marketing-year low.
  • But pressure is being limited as traders even positions ahead of tomorrow's 11 a.m. CT USDA reports. Traders expect USDA to trim the size of the corn crop, but for carryover to climb to reflect demand destruction.
  • Meanwhile, the U.S. dollar index has reversed course to trade sharply lower, which is also helping to limit pressure on grain futures.

 

Soybean futures have improved to favor a firmer tone, with nearbys 1 to 2 cents higher.

  • Price action is being muted in the soybean pit as traders don't want to extend long OR short positions ahead of tomorrow's key USDA reports.
  • A flurry of daily sales announcements from USDA are helping to firm futures. The announcement included: 180,000 MT of soybeans for delivery to China, 60,000 MT for 2012-13 and 120,000 MT for 2013-14; optional origin sales of 126,000 MT to China for 2013-14, and; 281,500 MT to an unknown destination for 2012-13.
  • Weekly soybean sales of 321,800 MT for 2012-13 and 85,000 MT for 2013-14 inched just above relatively light expectations. Soybean exports of 1,177,300 MT include shipments to China of 753,900 MT.
  • Positive outside markets are helping to support soybean futures, as traders digest news China's trade surplus came in well above expectations of $31.6 billion in December.
  • According to official Chinese customs data, record soybean imports in 2012 of 58.38 MMT were up 11.2% from last year and December imports of 5.89 MMT were up 9% from year-ago levels.

 

Wheat futures are mostly 3 to 5 cents higher on pre-report positioning and help from positive outside markets.

  • Sharp weakness in the U.S. dollar index is lifting crude oil and gold futures, which is supportive for grain futures this morning.
  • Traders' focus is on evening positions ahead of tomorrow morning's key USDA reports, as traders expect USDA to trim carryover from last month.
  • But buying is being limited by disappointing weekly wheat sales of 233,700 MT.
  • This morning's drought monitor shows just mild improvement across the Plains, but more rains are in the forecast for Texas to further help ease the drought.
  • Traders are also waiting on results from an Egyptian wheat tender. If the sale includes U.S. wheat, it would signal prices here are now competitive on the global market.

 

Live cattle futures are called to open mixed on possible short-covering after yesterday's losses.

  • Live cattle futures are expected to see a choppy start, with some short-covering expected following yesterday's losses.
  • But there is more near-term downside risk for nearby futures based on the premium February cattle hold to this week's cash trade of $128.
  • Cash cattle trade has not yet been active, but followup sales at similar levels are expected as packers hold the upper hand in this week's negotiations due to a larger showlist.
  • Boxed beef prices were mixed yesterday, but movement was strong at 266 loads.

 

Lean hog futures are called to open mixed on a combination of followthrough selling and short-covering.

  • Futures are due for some short-covering following yesterday's sharp losses, but futures are expected to favor a weaker tone on followthrough pressure.
  • February lean hogs are now trading in line with the CME lean hog index.
  • As a result, more focus will be placed on the cash market, which is expected to be steady to weaker the remainder of the week as packer are having no difficulty securing this week's supplies and are focused on improving profit margins.
  • Positive outside markets could also help to limit pressure on the livestock markets and attract short-covering.
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