Market Snapshot, Noon CT -- (VIP) -- January 13, 2014

January 13, 2014 05:55 AM


Corn futures continue to post 1- to 3-cent losses in most contracts at midday.

  • Light profit-taking following Friday's strong gains continues to weigh on the corn market.
  • The rally Friday was spurred by USDA report data showing a smaller-than-expected 2013 corn crop peg and record first quarter use.
  • However, a closer look at the data has some thinking the upside was overdone, since supplies are still ample and up sharply from year-ago.
  • Traders are also uncertain as to whether China's purchase of 120,000 MT of U.S. grain sorghum for 2013-14 delivery is a signal it is seeking alternatives to U.S. corn.
  • News that South Korea bought 137,000 MT of U.S. corn originally destined for China at a discounted price also reminds traders of the ongoing issues surrounding the rejection of U.S. corn cargoes to China.
  • Weekly corn export inspections of 20.902 million bu. came in just below the bottom of the pre-report guess range. This was up slightly from week-ago and well above year-ago.
  • Adding to demand concerns, Gulf corn basis slipped 2 and 3 cents for January and February delivery, respectively, at midday.

Soybean futures have surged to trade around 21 cents higher in the front-month, while deferred contracts are 12 to 14 cents higher.

  • The forecast for mostly dry conditions and hot temps in Argentina are raising crop concerns and futures prices to start the week.
  • Also, USDA's daily and weekly export data reminds of strong demand for U.S. soybeans.
  • USDA announced a 140,000 MT soybean sale to unknown destinations for 2013-14 delivery this morning.
  • Also, weekly soybean export inspections of 59.381 million bu. came in near the top of the pre-report guess range and up slightly from last week's total. Inspections were up more than 12 million bu. from year-ago.
  • Also, USDA in its reports Friday said use in the first quarter was record-high, though this news was somewhat offset by an increase in its 2013 crop peg.
  • Gulf soybean basis slid 1 to 5 cents for January and February delivery, respectively, at midday. But basis was steady to a penny higher for other delivery months.

SRW wheat futures have pared gains to trade 3 to 4 cents higher, while HRW wheat has softened to trade mixed. HRS wheat continues to enjoy slight gains.

  • News Egypt bought 55,000 MT of U.S. SRW wheat is lifting that flavor today as it signals U.S. wheat is once again competitive. Egypt is a value buyer.
  • Adding to such ideas, weekly wheat export inspections of 25.190 million bu. topped expectations and rose nearly 11.6 million bu. from the week prior. This adds to ideas wheat may have found "value" levels.
  • The market is also responding positively to news Egypt's economy minister said the government will permit 1.5 MMT in wheat exports, with 500,000 MT immediately authorized for shipment. This follows news the country's ag ministry raised its 2013-14 wheat crop estimate by 200,000 MT to 9.2 MMT.
  • The market is also benefiting from Friday's lower-than-expected all winter wheat seedings peg of 41.892 million acres. Countering this, however, is USDA's larger-than-expected U.S. wheat carryover peg, as well as an increase in global wheat carryover.
  • A number of contracts remain technically oversold, which is also providing light support.

Live cattle futures remain narrowly mixed at midday while feeder cattle futures continue to post slight to moderate losses.

  • Traders are taking advantage of last week's rally by engaging in some light profit-taking. Other contracts are enjoying mild followthrough buys.
  • Last week's gains were spurred by a record-setting performance in both the product and cash markets.
  • But the fact that traders are showing little interest in narrowing the $2 to $3 discount February futures hold to last week's cash prices signals the market remains on watch for a top.
  • This is despite the ongoing surge in the boxed beef market. This morning Choice cuts rose another $1.76 and Select firmed $2.01. Movement was light, however, at just 48 loads.
  • Light movement is one of the reasons traders believe a top is near.
  • Recent boxed beef strength spurred record-high cash cattle prices of $139 to $140 on the Plains last week. Whether feedlots are again able to get such lofty prices for cattle will depend on both boxed beef performance and showlist estimates.

Lean hog futures have pared losses to trade slightly lower across the board.

  • Buying interest in lean hog futures remains limited after recent technical damage.
  • And while the cash market has slowly improved, the product market has yet to give any concrete signs it is working on a seasonal low.
  • The pork cutout value slid another $1.03 this morning, but movement was strong at 239.69 loads.
  • Meanwhile, cash hog bids are mostly steady with a few higher bids as packers are working to make up for shortened kill hours last week due to inclement weather. An approaching storm system for the eastern third of the U.S. is also giving some packers incentive to raise bids.
  • Nearby futures remain at a wide premium to the cash hog index. This also gives bears an edge.
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