Market Snapshot, Noon CT -- (VIP) -- February 28, 2014

February 28, 2014 05:57 AM
 

 

Corn futures have extended early gains to trade 5 to 6 cents higher.

  • Sharp weakness in the U.S. dollar index following a major cut to U.S. fourth quarter GDP is favoring market bulls as traders wrap up the week and month.
  • Reminders of strong demand for U.S. corn is lifting the market to wrap up the month.
  • USDA announced a daily U.S. corn sale of 101,600 MT for 2013-14 delivery to unknown destinations this morning. USDA has announced 487,680 MT in daily corn sales this week.
  • Gulf corn basis rose another 2 to 3 cents for March and April delivery following an uptick this morning and yesterday. This signals more export demand news may be ahead.
  • Ag consultancy Safras cut its Brazilian corn crop estimate for 2013-14 by 3.6 MMT from January to 24.6 MMT.
  • The market is paying little attention to an update from Reuters that Chinese corn rejections due to the presence of an unapproved GMO strain between November and Feb. 24 totaled 887,000 MT. Traders were aware that some cancellations have been occurring.

 

Old-crop soybean futures have reversed course to post double-digit gains. New-crop beans have also firmed to trade 4 to 8 cents higher.

  • Yesterday's steep selloff followed by some mild followthrough selling today was seen as a bargain buying opportunity. Today's action has (thus far) restored the market's uptrend.
  • May soybeans are working on gains of nearly 10% for the month of February.
  • The March and May contracts have moved back above the key $14.00 level.
  • Sharp weakness in the U.S. dollar index is a supportive factor, as is another daily sales announcement. Egypt bought 120,000 MT of optional origin soybeans for 2014-15.
  • Light support also stems from news Safras slashed its 2013-14 Brazilian soybean crop estimate by 5.7 MMT from January to 86.1 MMT due to drought in major soy growing states and heavy rains in Mato Grosso.
  • Transportation issues in getting the crop to port have also been a major hold-up in Brazil, delaying any potential Chinese order cancellations for U.S. supplies.
  • Gulf soybean basis firmed 1 to 4 cents for summer delivery while other months held steady at midday.

 

SRW and HRS wheat futures have extended early gains to trade 7 to 15 cents higher in most winter wheat contracts. HRW wheat futures are 5 to 14 cents higher.

  • After facing profit-taking yesterday, traders have returned as bargain buyers.
  • Spillover from corn and beans adds spillover support.
  • Significant losses in the U.S. dollar index are also supportive, as it makes U.S. wheat more attractive globally.
  • They are also paying a bit more attention to the forecast. Windy, warm weather in the Southern Plains is drying out soils. Meanwhile, widespread snow is expected on the Central Plains this weekend with significant ice accumulation expected. Bitter cold air is expected to trail the system into the Plains and Midwest, renewing winterkill concerns.
  • In addition, major unrest in Ukraine means concerns the country's grain exports will slow are growing.

 

February live cattle are up sharply ahead of their expiration at noon CT today. Most deferred months are slightly higher. Feeder cattle futures are mixed.

  • Efforts to keep the front month in line with this week's cash cattle trade at $150 to $152.50 are keeping the contract sharply higher ahead of its expiration.
  • Deferred months, on the other hand, have seen some mild profit-taking ahead of month-end, though bulls maintain the advantage thanks to sharp dollar weakness, tight supplies and product market strength.
  • Choice boxed beef surged another $3.15 this morning and Select jumped $2.66. However, the runup in prices to nearly $225 per cwt. for Choice values slowed movement to 53 loads. As a result, traders are on watch for signs of a top.
  • Month-end positioning is keeping feeders choppy at midday. While steep losses in the U.S. dollar index are supportive, this is countered by firmer corn prices. Plus, March feeder cattle remain around a dollar above the cash index.

 

Lean hog futures are moderately to sharply higher, with the April contract closing in on its daily trading limit of $3.00 and deferred months roughly 50 cents to $2.00 higher.

  • The pork cutout value charged another $1.77 higher today and movement was solid considering lofty prices at 168.8 loads. Pork is still a value relative to beef.
  • Steady to higher cash hog bids amid strong demand and tighter supplies due to frigid temps this week are also supportive. More cold air is expected to trail a winter storm this weekend.
  • Traders remain concerned about the impact of the porcine epidemic diarrhea virus (PEDV) on the hog herd, especially as they look ahead to summer when supplies are seasonally tight.
  • Buy stops were likely triggered as the April contract gapped higher on the open and moved through psychological resistance at $104.00, $105.00 and $106.
  • Weakness in the U.S. dollar index and spillover from live cattle add to the positive tone.

 

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