Market Snapshot, 8:30 am CT (VIP) -- January 7, 2013

January 7, 2013 02:40 AM
 

Corn futures are mostly 4 to 6 cents higher on short-covering.

  • Ideas last week's losses were overdone is spurring some short-covering to start the week. This comes despite strength in the dollar index, although it has moved off its daily high.
  • Also supportive is news an unknown destination has purchased 102,200 MT of corn during the 2012-13 marketing year. This could be a sign that U.S. corn values have slipped far enough to make them competitive on the global market.
  • Gulf corn basis is steady to 1 cent higher this morning, which is another encouraging demand sign.
  • But corn futures have their work cut out for them to signal near-term lows have been posted.

 

Soybean futures are 8 to 13 cents higher on corrective buying.

  • Traders' focus to start the week is on short-covering after last week's losses.
  • Traders are also beginning to even positions ahead of Friday's key reports, which will set the trend in prices heading into spring.
  • However, Gulf soybean basis is 6 cents lower for immediately delivery, which raises concerns about demand.
  • Also limiting buying this morning is favorable weather across most of Brazil, which raises expectations for a record crop to fill China's near-term demand needs.

 

Wheat futures are 4 to 8 cents higher at all three exchanges on spillover from neighboring pits.

  • Wheat is seeing a lift on spillover from neighboring pits, as well as short-covering on ideas recent losses were overdone.
  • Traders' focus will also be on evening positions ahead of Friday's key reports, which include the Winter Wheat Seedings Report.
  • Wheat needs fresh demand news to energize bulls and provide a signal that U.S. prices are competitive on the global market.
  • Wheat has moved into oversold territory according to the Relative Strength Index, which signals a time or price correction is due.

 

Live cattle futures are called steady to lower on disappointment about a lack of active cash cattle trade last week.

  • Only light cash cattle trade was reported in the Southern Plains on Friday at $1 to $2 higher prices than the previous week at mostly $128, which means this week's showlist includes animals from last week.
  • February live cattle start the week at around a $5 premium to last week's cash trade, which could set the stage for a round of profit-taking.
  • Traders will also be keeping a very close eye on the boxed beef market, especially after values slipped on Friday.
  • But the tight supply situation will limit pressure to profit-taking as the outlook for 2013 remains bullish as long as the economy shows signs of improving.

 

Lean hog futures are called to open mixed, with traders gauging cash market signals.

  • Futures aren't expected to stray too far from unchanged to start the week as traders wait on clearer direction from the cash market.
  • The cash market is expected to start the week steady to firmer as many packers are in need of hogs, but traders will be hesitant to extend long positions given packers' negative profit margins.
  • February lean hog futures are starting the week at around a $3 premium to the cash index. This signals traders have a cautiously optimistic view toward cash.
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