Market Snapshot, Noon CT -- (Advice) -- January 9, 2014

January 9, 2014 05:53 AM

Crop producers: Advance 2013-crop corn sales, make initial 2014-crop corn and bean sales... Corn futures posted a downside breakout from the two-month consolidation range, signaling attitudes are becoming increasingly bearish. Ahead of tomorrow's USDA reports, hedgers are advised to make a 35% 2013-crop cash corn sale to get to 60% priced on old-crop in the cash market. Cash-only marketers are advised to make a 25% 2013-crop sale to get to 50% sold.

The technical picture and attitudes are also eroding for new-crop corn and soybean futures. Therefore, corn hedgers and cash-only marketers are advised to make a 20% cash forward contract sale on expected 2014-crop production for harvest delivery. Soybean hedgers and cash-only marketers are advised to make a 10% 2014-crop cash forward contract sale for harvest delivery.

Wheat producers: Advance 2013-crop cash sales, make initial 2014-crop sales... Wheat futures continue to fall amid plentiful global supplies and a weakening technical posture. With attitudes turning more bearish, we don't want to wait any longer to advance old-crop sales and to make initial new-crop sales. Wheat hedgers are advised to make the final 25% 2013-crop cash sale to get to 100% sold in the cash market on old-crop. Cash-only marketers are also advised to make a 25% 2013-crop sale to get to 75% priced on old-crop.

Wheat hedgers and cash-only marketers are advised to make a 35% cash forward contract sale on expected 2014-crop production for harvest delivery.

Corn futures are mostly around 6 cents lower at midday.

  • Market attitudes have turned decidedly bearish after penetrating recent support levels.
  • Contributing to the selloff is today's disappointing weekly export sales of 155,300 MT for 2013-14. However, light sales over the holiday season are not unusual.
  • Also, Brazil's Conab raised its peg of the Brazilian corn crop by 190,000 MT to 78.97 MMT.
  • Traders' continue to look ahead to tomorrow's USDA reports. Traders look for USDA to raise the size of the 2013 crop to 14.053 million bu. and for 2013-14 carryover to rise to around 1.84 billion bushels.
  • Some traders suggest tomorrow's Grain Stocks Report could be the market-mover, as traders expect the report to reflect near-record quarterly corn usage.
  • This set of reports have provided major surprises in the past, giving some incentive to move to the sidelines ahead of the reports.
  • Gulf corn basis is down 2 cents for immediate delivery, steady for February delivery, down 1 cent for March delivery and unchanged for deferred delivery. Today's basis activity suggests export news may be limited in the near-term.

Soybean futures have turned mixed, giving up some of their early gains. Old-crop contracts are 2 cents lower to 4 cents higher. New-crop contracts are down 1 to 2 cents.

  • Soybean futures have given up initial gains as traders even positions ahead of tomorrow's USDA reports.
  • Some light bull spreading continues to be a factor.
  • Pre-report surveys find traders looking for USDA to raise its production estimate slightly to 3.27 million bushels. They also expect carryover to be up nearly 1 million bu. from last month's 150-million-bu. projection.
  • Damping buying is this morning's weekly export sales of only 155,500 MT. This tally fell short of expectations and was a marketing-year low. However, strong exports in excess of 1.675 MMT somewhat offset this news.
  • Somewhat supportive this morning is USDA's announced sale of 110,000-MT for 2014-15 to China. So far this week the country has purchased 575,000 MT of U.S. beans.
  • Conab has raised its estimate of the Brazilian bean crop to a record 90.33 MMT -- up 300,000 MT from last month. However, Brazil's ag minister says the crop could "easily" exceed 95 MMT.
  • One positive is the 5 cent rise for immediate delivery in the Gulf soybean basis, which hints at additional business. This follows a 6-cent rise in early morning trade.

The wheat market continues to weaken with SRW wheat down 6 to 7 cents, HRW down 2 to 5 cents and HRS narrowly mixed.

  • Follow-through selling after yesterday's downside breakout is pressuring SRW wheat futures and dragging down the complex. With the technical picture decidedly bearish, rallies will be corrective in nature only for the near-term.
  • Wheat futures are also feeling spillover pressure from corn futures..
  • This morning's weekly export sales data met expectations, but expectations were on the low side. Sales of 110,800 MT for 2013-14 were a marketing year low. Sales of 184,100 MT for 2014-15 were also reported.
  • Traders continue to prepare for USDA's winter wheat acreage report, which is expected to show all winter wheat plantings for 2014-15 around 43.7 million, up 600,000 acres from the previous season.
  • Meanwhile, traders look for USDA to raise its 2013-14 U.S. carryover peg by around 16 million bu. to 558.8 million bushels.
  • Futures are also feeling pressure from the 4-cent decline in the Gulf SRW wheat basis at midday.

Live cattle futures have turned mixed. Feeder cattle futures are slightly higher.

  • Nearby live cattle futures are favoring a firmer tone on ideas cash cattle trade will be at least steady compared with last week's $137 action on the Southern Plains. Feedlots in the South are reportedly asking $139 while packers are bidding $135, which suggests late-week trade is likely.
  • A few isolated sales took place in the Iowa dressed market at $220 yesterday, up $2 from the bulk of trade in the state the week prior.
  • Showlist estimates are up in Nebraska and Colorado, but down slightly in Kansas and Texas.
  • The surge in boxed beef prices continues. Choice beef rose $1.83 and Select jumped $2.22 this morning on 90 loads. This follows yesterday's sharp rise on solid movement.
  • Packers continue to cut in the red, however, which raises concerns about demand for cash supplies.

Lean hog futures are trading slightly lower after gapping lower on the open.

  • Lean hog futures gapped lower at the open of trading on a decline in both the pork and cash markets yesterday.
  • However, futures erased the gap and have climbed back above yesterday's low on the weakness in corn futures, failure to attract follow-through selling and technical buying as February futures filled the upside gap left Aug. 26.
  • The pork cutout value slipped 25 cents this morning on average movement of 203.95 loads. This has some on watch for signs the product market is finally working on a seasonal low.
  • But the cash hog market has softened amid improved weather across the Corn Belt. However, travel-disrupting precip could move back into the region late this week.
  • Buying interest in the February contract continues to be limited by its $5 premium to the cash hog index.
  • Traders are ignoring the 21,100-MT surge in 2014 pork export sales the week ended Jan. 2. USDA also reported sales of 1,100 MT for the final days of 2013.
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