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

January 25, 2013 02:48 AM
 

Corn futures are fractionally to 3 cents lower this morning with nearbys leading losses.

  • Nearby corn futures are under light pressure after rains moved through Argentina's corn belt yesterday. Although there's little rain in the near-term forecast, milder temps will limit crop stress.
  • Traders are disappointed by this morning's weekly export sales data, as corn sales of 138,400 MT for 2012-13 and 51,300 MT for 2013-14 were below expectations.
  • But the lead buyer of old-crop corn was China with purchases of 163,500 MT.
  • Gulf corn basis is 2 cents higher for January shipment at 50 cents over March corn futures -- reflecting tight supplies.

 

Soybean futures are 3 to 7 cents lower, with meal and soyoil seeing spillover pressure.

  • Soybean futures are weaker this morning on anticipation of a record South American soybean crop. Recent rains in Argentina have eased drought stress to the region.
  • A strong weekly export sales figure is taking a backseat to South American weather news. Export sales of 383,300 MT for 2012-13 and 595,000 MT for 2013-14 were above expectations.
  • China was the lead buyer for both marketing years, and exports of nearly 1.3 MMT were up 5% from the previous week.
  • Gulf soybean basis is 4 to 5 cents higher for nearby delivery at 99 cents over March futures to reflect too-strong demand considering tight available supplies.

 

Wheat futures have firmed on stronger-than-expected weekly export sales. Nearby wheat futures at all three exchanges are firmer, with deferreds mixed.

  • Weekly export sales of 572,500 MT for 2012-13 and 75,000 MT for 2013-14 were above expectations. Exports of 559,300 MT were nearly double the previous week.
  • Strong export sales combined with sharp weakness in the U.S. dollar index this morning are giving wheat futures a lift.
  • Also supportive are weather concerns in the U.S. Southern Plains, although there is some rain in the weekend forecast.
  • But buying interest is being limited by weakness in neighboring corn and soybean markets.

 

Live cattle futures are called steady to firmer after packers raised their bids in Nebraska.

  • Additional cash cattle trade was reported in Kansas yesterday at $122 -- which is down $2 to $3 from last week and was steady with trade seen on Tuesday. But packers in Nebraska raised bids late yesterday to secure cattle at steady prices with last week.
  • Traders will also be focused on evening positions ahead of this afternoon's Cattle on Feed Report, which will remind the market of the tightening supply situation.
  • But sharp weakness in the boxed beef market this week could limit buying in live cattle futures, as Choice beef values slipped $1.77 yesterday to $188.01 per cwt.
  • Futures remain oversold according to the 9-day Relative Strength Index.
  • Traders are also counting on improved near-term export demand from Japan, as the country finalizes its rule to allow beef imports from animals aged 30 months or younger (currently 20 months or younger).

 

Lean hog futures are called steady to higher on followthrough from yesterday's gains.

  • A combination of followthrough from yesterday's sharp gains in the nearby contracts and further improvement in the cash hog market is expected to result in a stronger start for lean hog futures this morning.
  • Packers unexpectedly raised bids yesterday amid a tightening supply situation despite poor profit margins. Mostly firmer cash bids are expected again this morning.
  • Meanwhile, pork cutout values slipped 38 cents to push packers' profit margins further into the red, but pork movement was strong at 119 loads.
  • February lean hog futures are trading at a slight discount to the cash index, which is projected at $87.78. This opens fresh upside potential for nearby lean hog contracts.
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