Market Snapshot, Noon CT -- (VIP) -- February 18, 2014

February 18, 2014 05:56 AM

Corn futures continue to post gains around 2 to 3 cents at midday.

  • Weakness in the U.S. dollar index is seen as adding to strong demand for U.S. corn. Gains in the soybean and wheat market add to the positive tone.
  • Weekly export inspections data reminds of strong corn demand. Corn export inspections of 827,610 MT topped expectations as well as week- and year-ago figures by a wide margin.
  • Gulf basis firmed 2 cents for February, March and June delivery at midday, while other months held steady. This signals more demand news may lie ahead.
  • So far, the front-month contract has respected tough resistance at $4.50.

Old-crop soybeans have strengthened to post gains of 17 to 20-plus cents in old-crop futures, while September and later contracts are 6 to 13 cents higher.

  • Confirmation of strong demand and the ongoing supply tightness it implies for old-crop beans are lifting nearby contracts. Strong gains in soybean meal adds support.
  • Weekly soybean export inspections of nearly 1.471 MMT came in above already high expectations. Inspections for 2013-14 are running 17.9% ahead of year-ago, versus USDA's forecast for inspections to top year-ago by 14.4%.
  • The National Oilseed Processors Association (NOPA) reports soybean crush fell from 165.384 million bu. in December to 156.943 million bu. in January. This was short of expectations for a 162.4-million-bu. crush and down from 158.195 million bu. last year. Soyoil stocks for January at 1.794 billion lbs., however, were below expectations.
  • The market is also seeing some technical buying as the front month moved back above $13.50. Weakness in the U.S. dollar index is also supportive.
  • Some private crop watchers have lowered their production forecasts for Brazil, keeping dryness concerns close at hand. However, Brazil's crop is still expected to be record-large.
  • Gulf soybean basis was steady this morning and at midday.

SRW wheat futures are 6 to 10 cents higher, while HRW wheat is up 8 to 11 cents and HRS is 9 to 13 cents higher.

  • The bullish chart pattern of the wheat markets along with spillover from soybeans and a weaker U.S. dollar index are lifting wheat futures to start the week.
  • Another week of dry weather for the Southern Plains keeps drought concerns in mind, especially with temps in Texas expected to top 80 degrees today.
  • Meanwhile, trader remain aware that transportation disruptions in Canada are turning importers like Japan to the U.S.
  • However, weekly wheat export inspections of 266,507 MT fell short of expectations and declined from the week prior.
  • Kazakhstan plans to sell 509,000 MT of grain on its domestic market at fixed prices between February and August in an effort to stabilize bread prices. This is not expected to alter the country's plans to export at least 9 MMT of grain this marketing year, however.
  • Gulf SRW wheat basis ticked up 2 cents for immediate delivery, possibly signaling demand news is ahead.

Live cattle futures are slightly to moderately higher with nearbys leading gains. Feeder cattle futures are moderately higher across the board.

  • Signs are building that the boxed beef market has put in a low. Choice and Select values rose another $1.01 and $1.83, respectively, this morning following strong gains Monday.
  • Also, beef movement improved notably last week, though the price gains have tempered movement again this week. This morning, 81 loads changed hands.
  • Support also stems from cash cattle trade at $142 to $143 last week, which was up from the week prior.
  • Tighter showlist estimates this week and the solid start to boxed beef trade means early week cash expectations are favorable.
  • However, packers are dealing with deeply negative profit margins.
  • The bullish chart posture of the feeder cattle market as well as weakness in the U.S. dollar index are lifting feeder cattle futures.

Lean hog futures are moderately to sharply higher at midday.

  • Cash hog bids are steady to as much as $3 higher today as packers are short-bought after weather disruptions this week and last week and closure due to Presidents Day. With more winter weather disruptions possible this week, packers are raising bids to secure needed supplies.
  • A positive cash outlook propelled the April contract to a gap higher start and new contract highs, spurring some technical buying as well.
  • Packer profit margins remain in the black, meaning they have incentive to keep kill lines full.
  • Traders are not overly concerned about the wide ($10) premium the front-month holds to the cash index as the index continues to rise and much time remains before its April expiration.
  • The pork cutout value slipped 61 cents this morning; movement was decent at 160.99 loads.
  • The spread of the porcine epidemic diarrhea virus (PEDV) remains an underlying source of support.
  • A softer U.S. dollar index adds to the bullish tone in lean hog futures.
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