Market Snapshot, 8:30 am CT (VIP) -- January 18, 2013

January 18, 2013 02:44 AM
 

Corn futures are 1 to 3 cents higher, with buying limited by strength in the dollar index.

  • Corn is seeing a boost from short-covering following yesterday's softer close. But a lack of fresh news is limiting buying interest.
  • Strength in the dollar index is also limiting buying, although corn is working on solid weekly gains to suggest near-term lows have been posted.
  • Traders are also keeping a close eye on the corn/wheat price spread. March corn futures are trading at around a 55 cent discount to March Chicago wheat futures.

 

Soybean futures are narrowly mixed with nearby contracts currently favoring the downside.

  • Futures have seen mixed trade today on short-covering following yesterday's losses. The market is off highs posted earlier.
  • Pressure is being limited by concerns about dryness in Argentina and southern Brazil, although traders still fully expect a record South American soybean crop.
  • State-run China National Grain and Oils Information Center says Chinese purchases from the U.S. and South America last week totaled 1.8 MMT to 1.98 MMT -- well above normal due to positive crush margins.
  • China's economy grew at a 7.9% clip in the fourth quarter, making investors more optimistic about growth in the year ahead.

 

Chicago and Kansas City are marginally to 2 cents lower while Minneapolis futures are narrowly mixed.

  • Pressure on Chicago wheat futures is being limited by strength in the corn market, although wheat has moved off session highs due to strength in the dollar index.
  • Dryness in the U.S. Southern Plains is concerning given the lack of snowcover over the region and little precip in the near-term forecast.
  • But otherwise, there's little fresh news for the wheat market to digest, which is limiting buying interest as traders wait for export demand to solidly pick up.

 

Live cattle futures are called steady to firmer on short-covering.

  • Live cattle futures plunged sharply to limit lower in reaction to news Cargill will idle a Texas beef processing plant early next month. But futures came well off session lows into the close to suggest traders overreacted to the news.
  • Traders fear the shutter of the plant will result in cattle feedlots backing up, but this plant was running at reduced slaughter capacity for quite some time and supplies are tight.
  • February live cattle futures are now trading near in line with the cash market. As a result, traders could view futures as a value buy as the price outlook for the year is still quite bullish.
  • Boxed beef prices dropped sharply yesterday, but movement improved to 215 loads. Choice values slipped $1.63 and Select declined $1.84.

 

Lean hog futures are called mixed as traders reevaluate positions ahead of the weekend.

  • Price action should be relatively muted today as traders move to the sidelines ahead of the extended holiday weekend. With the markets closed on Monday for Martin Luther King Jr. Day, focus will be on evening positions.
  • But upside potential will be limited by concerns about the cash market as packers' profit margins have slipped well into the red. Pork cutout values slipped just 37 cents yesterday.
  • February lean hog futures are trading in line with the cash index, which should also limit price moves in futures today.
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