Corn futures remain mixed with old-crop fractionally higher and new-crop marginally lower.
- Corn futures have not strayed far from unchanged today as traders try to get a handle on near-term price direction. Some bull spreading is also taking place.
- Traders have turned the $4.50 area into support for the March contract, but there is uncertainty regarding how much upside potential there is for the market.
- While demand has been strong for U.S. corn, there is concern that higher prices could trim exports.
- So far, this has not seemed the case, however. USDA announced a 101,600 MT corn sale to unknown for 2013-14 this morning. Traders will closely examine tomorrow's export sales report for more insight as to demand.
- Gulf basis held steady at midday, after firming 1 to 3 cents for most delivery months this morning. This also indicates demand has not yet slowed.
- Old-crop futures are also being lifted by signs of demand strength at home. Ethanol production for the week ended Feb. 21 rose 2,000 barrels per day (bpd) to 905,000 bpd. Ethanol stocks declined 179,000 barrels to 17.02 million barrels.
- On the other hand, expectations for a record-large 2014 corn crop are tempering buying in new-crop futures.
Soybean futures are split with old-crop fractionally to 3 cents higher for the most part, and new-crop 2 to 4 cents lower.
- Bull spreading is driving action in the soybean market today.
- Nearbys remain supported by the bullish posture of the charts, strong demand and crop concerns in South America.
- March beans are back above key resistance at $14.00 after setting a new contract high this morning; key will be whether the contract is able to close above that level.
- Fundamentally speaking, support comes from more declines in production estimates for South America. Excessive rains in Brazil following a dry spell are slowing harvest and raising concerns about disease.
- Parana's ag department has trimmed the state's soybean crop estimate from 16.5 MMT to 14.47 MMT due to drought conditions.
- Dr. Cordonnier, Pro Farmer's South American consultant, trimmed his bean crop estimate for Brazil by 500,000 MT to 88.5 MMT yesterday.
- Plus, soybean order cancellations have not yet materialized. In fact, the soybean market benefited from a large old-crop bean sale yesterday.
- Gulf basis is steady at midday after firming 1 to 3 cents for most delivery months this morning.
Wheat futures are down 6 to 7 cents in the SRW market, while HRW is down 4 cents in most contracts. HRS wheat is up 2 cents in the front-month contract, but roughly 3 cents lower in deferred months.
- Export demand concerns continue to weigh on the wheat market after Egypt, a value buyer, cancelled an order for U.S. wheat yesterday. Traders are concerned the recent price rise will choke off demand.
- Tomorrow's Weekly Export Sales Report will provide an update on that front.
- Gains in the U.S. dollar index add profit-taking incentive today.
- But pressure on futures is being limited by concerns about transportation problems in Canada, though fresh demand news is needed to keep futures supported at current levels.
- In addition, another winter storm event is expected to move in this weekend and be followed by another blast of cold air keeps winterkill concerns close at hand.
Live cattle futures have extended early gains to trade slightly to sharply higher with nearbys leading to the upside. Feeder cattle futures are slightly to moderately higher.
- Nearby live cattle futures contracts have extended early gains on a surge in the beef market, following strong gains in recent sessions.
- Choice boxed beef jumped $2.09 this morning while Select surged $2.87; even more impressive, movement impressed at 119 loads, which is already above yesterday's total.
- This adds to ideas cash cattle trade will take place at higher prices this week, despite heavier showlist estimates.
- Early bids are reportedly at $144, which is steady with the low end of last week's $144 to $145 cash cattle trade on the Southern Plains. Sales in Nebraska and Colorado last week took place at $147 to $148.
- Adding to firmer cash cattle expectations is the forecast for yet another winter storm and ongoing cold temps this weekend and next week, which will stress cattle.
- Gains in the feeder cattle market are being tempered by gains in corn and the U.S. dollar index.
Lean hog futures are choppy at midday, with the front-month maintaining solid gains.
- While the technical posture of the lean hog market is fully bullish, most contracts are technically overbought, warranting a time or price correction. Strength in the U.S. dollar index is giving some incentive to exit positions.
- The pork cutout value firmed 14 cents and movement was again strong at 263.32 loads this morning. This paired with yesterday's solid movement has eased concerns about resistance to higher prices. The pork cutout value is within 27 cents of the $100 per cwt. mark.
- Concerns about the porcine epidemic diarrhea virus (PEDV) remain an underlying source of support.
- The cash hog index continues to firm as packers have been paying steady to higher prices for supplies, taking advantage of wide profit margins and (finally) a week without major transportation issues. However, more winter weather is expected for the Midwest this weekend.