Market Snapshot, Noon CT -- (VIP) -- January 22, 2014

January 22, 2014 06:06 AM

Corn futures are narrowly mixed at midday.

  • Light short-covering continues to dominate nearby futures, but buying interest is very limited.
  • Futures saw some light support from USDA's announcement Japan bought 105,664 MT of U.S. corn for 2014-15 delivery.
  • The market is also saw light buying interest from news the head of China's top ag policy-setting office says he expects China will likely import more corn to meet rising demand.
  • But outside of short-covering, buying interest is limited as soybeans have turned lower.
  • Gulf basis is steady at midday.

Soybean futures are 3 to 6 cents lower in old-crop futures, while new-crop futures are choppy.

  • Old-crop futures are lower due to recent rains in Argentina that boosted concerns China may cancel some of its orders of U.S. soybeans. New-crop futures are gaining some light buying support on unwinding of old-crop/new-crop spreads.
  • China has taken shipment on 18.8 MMT of U.S. beans for 2013-14, but the country still has 8 MMT of outstanding sales on the books, about double year-ago levels.
  • South American supplies will like come available late February/early March if there are no harvest or logistic problems.
  • However, the head of China's top ag policy-setting office has recent stated that the country will likely import more soybeans.
  • Also, China National Grain and Oils Information Center (CNGOIC) says the country will likely import 5.35 MMT of soybeans in January. This compares to the ministry of commerce's forecast for 4.61 MMT in imports.
  • Gulf soybean basis at midday is providing some light support as basis is 2 cents firmer for nearby delivery and five cents higher for February delivery, raising hopes of additional export sales. April delivery is 3 cents weaker, however, while March and May delivery are unchanged.

SRW wheat futures are slightly higher, while HRW and HRS wheat are fractionally to 5 cents higher this morning.

  • SRW wheat futures have erased earlier fractional losses and are trading in the plus column on corrective short-covering after March futures failed to penetrate contract lows.
  • Traders continue to shrug off concerns about potential winterkill due to the arctic blast on northern winter wheat areas as it remains north of areas where the winter wheat crop is most exposed to the elements. Concerns over drought in the Southern Plains are beginning to surface, however.
  • Nearby futures are also gaining some support on ideas U.S. wheat prices may have fallen far enough to attract some value buying. But strong, consistent demand news is needed to drive active buying.
  • Technical traders are working on correcting the heavily oversold condition of the wheat market.
  • Gulf SRW basis is unchanged at midday.

Live cattle futures are moderately to sharply higher in nearby contracts with February leading gains. Deferred months are mixed. Feeder cattle futures continue to trade slightly lower.

  • Unconfirmed reports of cash cattle trade in Texas and Kansas at $147 today gave nearby contracts a lift. February futures are at nearly a $4 discount to those prices. This would be up $5 from the bulk of trade in the region last week.
  • Gains were spurred by the ongoing beef market rally. This morning, Choice boxed beef rose $1.01 to $240.73 per hundredweight. Select beef also saw a gain of 17 cents. Perhaps even more impressive, movement picked up to 80 loads.
  • While showlist estimates are up this week, frigid Midwest temps are stressing cattle in northern locations and may reduce supplies regionally.
  • Traders are looking ahead to this afternoon's Cold Storage Report, which is expected to show frozen beef stocks at the end of December around 451.4 million lbs., which would be up slightly from the month prior but down from year-ago levels.
  • Feeder cattle futures are enjoying spillover support.

Lean hog futures have improved to trade mixed.

  • Lean hogs have improved thanks to improvement in the cattle market.
  • But buying interest remains limited by concerns about weakening wholesale pork prices in the face of rising average weights.
  • The pork cutout value eased another 75 cents this morning following recent declines. But movement is a healthy 315.19 loads. This is giving some traders hope as they look at the rise in pork movement in the face of recent slippage in wholesale beef movement. This could be an early sign the record boxed beef prices may lift the pork market as well.
  • Average hog weights in Iowa and southern Minnesota rose 1.1 lbs. the week ended Jan. 18 and the head count estimate surged 25,000 head from week-ago.
  • Cash hog bids are mixed today, as some are bought ahead while others are struggling to book supplies due to icy road conditions.
  • Traders also are working to remove some of the wide premium February futures hold versus the cash hog index, which has trended lower of late.
  • Traders are also preparing for this afternoon's Cold Storage Report. Pre-report expectations are for frozen pork stocks to come in around 548.2 million lbs., which would be up slightly from November, but down from year-ago.
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