Market Snapshot, Noon CT -- (VIP) -- February 27, 2014

February 27, 2014 05:58 AM


Corn futures continue to chop around unchanged, with most contracts around 2 to 3 cents lower at midday.

  • Corn futures are seeing mild profit-taking as well as some spreading with soybeans.
  • But that is the extent of selling interest thanks to reminders of strong export demand today.
  • The Weekly Export Sales Report showed corn sales of 840,800 MT for 2013-14 and 1,500 MT for 2014-15. This tally topped expectations. Exports of 853,100 MT were up 15% from the previous week.
  • Adding to the strong demand picture, USDA announced a 284,480 MT corn sale to Mexico for 2013-14.
  • While recent gains in prices have caused basis at interior locations to soften amid increased farmer sales, Gulf basis ticked another penny higher at midday, possibly signaling more export demand news is ahead.
  • Light support stems from news International Grain Council (IGC) says global corn production may decline slightly in 2014-15 as yields decline to more normal levels. IGC left its 2013-14 global corn production estimate at 959 MMT.

Soybean futures have pared gains slightly since the morning update, but old-crop futures continue to enjoy double-digit gains. New-crop futures are 5 to 6 cents higher.

  • The technical posture of the soybean market clearly favors market bulls, as does fundamental news today. Mild profit-taking has trimmed early gains.
  • Traders were impressed by this morning's Weekly Export Sales Report that showed soybean sales of 327,700 MT for 2013-14 and 315,200 MT for 2014-15, with China as the lead buyer of both old- and new-crop buys. The overall tally met expectations.
  • China accounted for 1.1 MMT of total exports of roughly 1.797 MMT the week ended Feb. 20.
  • Also this morning, USDA announced China purchased 112,000 MT of optional-origin soybeans for 2013-14.
  • Anticipated order cancellations by China have not yet materialized thanks to shipping delays in South America. Futures are also being supported by concerns the top end of yield potential has been shaved off the Brazilian crop due to late-season dryness in southern Brazil and rains causing quality issues in Mato Grosso.
  • Gulf soybean basis is steady at midday.

SRW wheat futures are 3 to 5 cents lower at midday, while HRW and HRS wheat futures are seeing choppy trade.

  • SRW wheat futures are being pressured by news Argentina has approved another 500,000 MT of wheat for export, taking the total so far for 2013-14 to 1 MMT.
  • Also, Egypt's state grain buyer purchased 295,000 MT of Russian and Romanian wheat for March shipment today. Since the nation is a value buyer and this follows news it cancelled a U.S. wheat buy earlier this week, this renews concerns about the competitiveness of U.S. wheat prices.
  • However, this morning's weekly sales report showed wheat export sales of 365,100 MT for 2013-14 and 199,800 MT for 2014-15, topping expectations.
  • Traders are not overly concerned about slight expansion of drought in the Southern Plains, nor the forecast for snow, sleet and freezing rain in the Southern and Central Plains early next week.
  • International Grain Council (IGC) expects global wheat production to decline 2% in the 2014-15 marketing year, relative to the year prior. IGC raised its 2013-14 global wheat crop estimate by 1 MMT to 708 MMT.

February live cattle are around $2.00 higher this morning, while deferred months are mixed. Feeder cattle futures have softened to post slight losses.

  • February live cattle continue to enjoy strong gains thanks to technical buying and efforts to keep it in line with surging cash cattle price ahead of its expiration Friday.
  • Trade in Nebraska got underway yesterday at $152 -- up $4 from the week prior and a record for the region. Kansas and Texas saw trade at $5 to $6 higher prices relative to the week prior at $150.
  • Encouraging these strong cash prices has been an impressive performance in the boxed beef market this week. This continued this morning as Choice cuts rose another $1.35 and Select firmed $1.66. Movement was also solid considering prices around $220 per cwt. for both cuts at 92 loads.
  • And while showlists are up a bit from week-ago, supplies as a whole are historically tight.
  • Profit-taking has taken hold in feeder cattle futures as traders worked to narrow the premium nearbys hold to the cash index.

April lean hogs have extended early gains and have traded as much as their $3.00 daily trading limit higher. Deferred months are slightly to moderately higher.

  • April lean hogs remain supported by technical buys, cash and product market strength and spillover support from live cattle.
  • Packers are paying steady to sharply higher prices for cash hogs today ahead of another winter storm event. In addition, bitter cold across the upper Midwest is making producers unwilling to transport hogs; frigid temps are expected to linger into next week.
  • The cash hog index continues to surge, but gains have been matched or exceeded by gains in the April contract, maintaining the wide gap (around $9) between the two prices.
  • Packers have seen margins narrow this week as they have been forced to pay up for supplies, but they remain in the red.
  • Gains in the pork cutout value have helped to keep margins positive. The pork cutout value surged $2.01 this morning to $101.84 per hundredweight. Movement was also solid at 177.996 loads.
  • News Russia will lift its export ban on U.S. pork that is ractopamine free March 10 is also mildly supportive.
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