Market Snapshot, 8:30 am CT (VIP) -- January 9, 2013

January 9, 2013 02:43 AM
 

Corn futures has improved to trade 1 to 3 cents higher through the December 2013 contract. Farther deferred contracts are narrowly mixed.

  • Traders remain focused on evening positions ahead of USDA's key reports to be released on Friday morning, as past January data has created limit moves in the corn market.
  • Upside potential is being limited by strength in the U.S. dollar index.
  • Buying is also being capped by prospects for a larger corn crop in Brazil, as the country's supply estimating arm, Conab, raised its crop peg marginally to 72.19 MMT and sees corn exports at 21.5 MMT.
  • Gulf corn basis is 1 to 5 cents lower this morning to reflect demand destruction.

 

Soybean futures are mixed, with the January through September contracts 1 to 3 cents higher.

  • Traders continue to take a cautious approach toward the market ahead of Friday's key USDA reports, as the data could set the price tone heading into spring.
  • Buying is also being limited by a reminder of record crop potential in Brazil. Conab raised its estimate of the crop marginally from its previous peg to a record 82.7 MMT. Mostly favorable weather this week is maintaining a favorable outlook for the crop.
  • USDA announced an optional-origin soybean sale of 120,000 MT to China for 2013-14. This means the soybeans could also come from another destination such as Brazil.
  • Gulf soybean basis is steady to 5 cents lower for nearby delivery this morning, which reflects the recent slowdown in demand.

 

Wheat futures are favoring a mildly firmer tone in mixed trade.

  • Strength in the dollar index is limiting buying to short-covering, but traders are still noting the oversold condition of the market.
  • Traders are also focused on evening positions ahead of USDA's key Friday reports. Traders look for USDA to trim carryover, but for winter wheat acreage to be up from year-ago.
  • Upside potential is also being limited by rains moving across Texas this morning, although lighter amounts are being noted in Kansas and Oklahoma.
  • Gulf wheat basis is 2 to 5 cents lower for nearby delivery, suggesting a softening of demand.

 

Live cattle futures are called to open mixed, with buying limited by steady cash cattle trade.

  • After light cash cattle trade at $128 in Texas yesterday, traders are taking a more cautious approach to futures this morning given the $4-plus premium February contracts hold to the cash market.
  • This week's cattle showlist is up from last week after supplies were carried over last week, which weakens feedlots' bargaining power.
  • But pressure on futures will be limited by yesterday's firmer tone in the boxed beef market on strong movement of 218 loads.
  • Feeder cattle futures are called mixed due to choppy price action in the corn market and an expected mixed open in live cattle.

 

Lean hog futures are called to open mixed as traders gauge the cash market.

  • Packers' profit margins have improved, but are still slightly negative.
  • The pork cutout value slipped 63 cents yesterday, but movement was strong at 121.04 loads. The cash market is expected to be mostly steady today, but some mixed undertones could develop due to varied demand.
  • February lean hog futures are trading at just under a $3 premium to the CME lean hog index, which is projected at $83.86. This signals traders still hold a slightly positive bias toward the cash market near-term.
     
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