Market Snapshot, Noon CT -- (VIP) -- January 29, 2014

January 29, 2014 06:03 AM
 

Corn futures remain 1 to 2 cents lower this morning.

  • Spillover selling pressure from wheat and soybeans along with a general move away from risk has corn futures on the defensive.
  • Early weakness came on strength in the U.S. index which came of buying triggered about currency devaluations in emerging markets. But that dollar has weakened as well and corn is ignoring the turnaround.
  • Signs corn prices have moved lower to attract strong domestic demand as well as export demand is limiting downside pressure. The trade is looking to tomorrow's weekly export sales report to provide an update on export demand.
  • A 2- to 3-cent rise in Gulf corn basis this morning for all contracts except February delivery signals more demand news may lie ahead.
  • Traders are finding mixed news in today's ethanol numbers. Production over the last week declined 5,000 barrels per day to 900,000 bpd, but ethanol stocks dipped 86,000 barrels to 16.93 million barrels.
  • Gulf basis is unchanged at midday following strength in early trading.

Soybean futures continue to extend early losses and are trading 13 to 18 cents lower in old-crop months and 4 to 5 cents lower in new-crop contracts.

  • Worries over potential Chinese soybean order cancellations are pressing soybean futures lower along with the general mood swing away from risk.
  • Soybeans were pressured by dollar strength in early trading but have turned a blind eye to the turnaround decline in the U.S. dollar index, which may be working on a bearish flag formation.
  • Brazil is gearing up to begin shipping its record-large crop which has traders not only nervous about potential cancellations from China but concerned over what other impacts may occur when the global market has fresh supplies.
  • Adding to such concerns is the continued spread of the H7N9 bird flu in China. If a widespread outbreak occurs, this could take a bite out of the country's feed needs.
  • USDA's ag attaché in Brazil recently pegged the country's soybean crop at 89.5 MMT and said he expects exports of 46 MMT. USDA in January projected a crop of 89 MMT with exports of 44 MMT for Brazil.
  • Gulf soybean basis is unchanged in midday trading.

SRW wheat continues to post double-digit losses while HRW wheat is down 8 to 10 cents and HRS wheat is down 5 to 7 cents.

  • Early dollar strength and the general shift away from risk pushed wheat futures to fresh 3 1/2-year lows.
  • The dollar has since reversed but technical follow-through selling on the move to new contract lows continues to keep pressure on the market.
  • Traders showed limited concern over potential winterkill this week as the arctic blast continued to pour over the unprotected crop. But not traders are viewing forecasts for snow to spread over the unprotected areas this week as positive for the crop and bearish for prices.
  • Traders still believe the crop entered in good shape and it is too early for crop worries as it will not emerge from dormancy until April.
  • Gulf SRW wheat basis is unchanged at midday after firming earlier this morning.

Live cattle futures continue to market slight losses with the exception of the April contract which is slightly higher. Feeder cattle futures are slightly to moderately weaker.

  • Cattle futures are generally lower as the pullback in the boxed beef market continues.
  • Choice boxed beef fell $3.31 this morning while Select declined $1.86. Movement is a little firmer at 81 loads.
  • The cash market saw trading took place last week at mostly $147 in the Southern Plains, while northern locations saw action at $150. But traders are leaning toward slightly weaker cash prices when negotiations get underway this week.
  • While showlist estimates are up for this week, the continuing cold is stressing exposed cattle and limiting gains.
  • Packer margins remain positive, which may give the market some support.
  • February futures are slightly weaker but they are at a wide discount to last week's cash prices, which is limiting losses.
  • Traders are also beginning to look ahead to the Cattle Inventory Report, which is expected to show all cattle and calves at 98.6% of year-ago levels while the annual calf crop is expected to come in at 97.9% of year-ago levels.
  • Feeder cattle futures are lower on spillover from live cattle as well as profit-taking amid ideas a top may be in place.

Lean hog futures are slightly to moderately higher.

  • Firmer cash and wholesale prices lifted futures early this morning as traders look for signs the product market has put in a seasonal low and will benefit from record-high beef prices.
  • Traders are shrugging off weakness in the pork cutout value this morning, which slipped 86 cents. Movement is a positive 252.12 loads.
  • Traders continue to look for pork demand to improve as retailers begin passing record-high boxed beef prices on to consumers.
  • Cash prices are steady to firmer as packers resume normal operations.
  • The cash hog index continues to strengthen, but the front-month February contract is widening its $5 premium to the index with a gain in excess of $1.00 today, a sign of rising confidence in that market.
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