Market Snapshot, Noon CT -- (VIP) -- January 8, 2014

January 8, 2014 05:59 AM

Corn futures continue to trade defensively, down 5 to 7 cents.

  • Corn futures are lower on forecasts for rain over key corn-growing regions of Argentina and ideas USDA will boost the size of the 2013 crop in Friday's report.
  • USDA will issue a host of reports Friday, and traders are leaning to the negative side in terms of expectations. Traders expect USDA to peg the 2013 corn crop at 14.053 billion bu, up 68 million bu. from November.
  • News Chinese quarantine officials have reportedly relaxed inspections for unapproved GMO material in U.S. DDGs is supportive. But, trade sources expect inspections of U.S. corn shipments to remain tight. For this reason, private firm Shanghai JC Intelligence Co. cut its 2013-14 Chinese corn import forecast by 2.2 MMT to 4.4 MMT.
  • A U.S. Grain Council (USGC) delegation is in China this week working toward gaining the country's approval of MIR 162 (Syngenta's Agrisure Viptera), which has triggered the rejection of corn and DDGs in recent months.
  • The stronger U.S. dollar index is cited as a negative.
  • Midday Gulf corn basis is 4 cents lower for immediate delivery, 3 cents weaker for February delivery and steady for deferred delivery. The weaker near-term bids are seen as a sign of weakening export demand.

Soybean futures are 1 to 9 cents lower with far-deferred months leading losses.

  • Rains projected for tomorrow and Friday across Argentina, a stronger U.S. dollar index and negative expectations from USDA's reports on Friday has soybeans trading lower.
  • Traders expect USDA to raise its 2013 production estimate by 12 million bu. from November to 3.27 billion bushels.
  • Forecasts for timely rains to move across Brazil and Argentina removes concerns for the record-large crop expected out of South America. Early harvest yield results in Brazil are very good.
  • Traders continue to ignore another daily sales announcement, as strong demand is known. USDA announced China purchased 115,000 MT of U.S. soybeans for 2013-14. Instead, traders worry China will cancel previous U.S. soybean purchases as the Brazilian crop becomes available.
  • Midday Gulf soybean basis is 3 cents lower for immediate delivery and unchanged for February and deferred delivery, which adds to the negative tone in soybean futures.

Wheat futures continue to trade lower and are extending losses following a higher opening. SRW market is 8 to 9 cents lower, HRW is 3 to 6 cents lower and HRS wheat is mostly 3 to 5 cents lower except for the lead March contract which is fractionally higher.

  • Wheat futures traded higher in early trading but have slumped on the stronger U.S. dollar index and as temperatures on the Plains have eased and beneficial rains are expected for some regions.
  • Traders also are taking a negative view for Friday's reports from USDA. All winter wheat seedings in 2014-15 are expected to come in at 43.7 million acres, which would be up roughly 600,000 acres from 2013.
  • Traders expect USDA to peg Dec. 1 wheat stocks at 1.41 billion bushels. Ending stocks for 2013-14 are expected to come in around 559 million bu., which would be down 16 million bu. from December.
  • Midday Gulf SRW wheat basis steady for all delivery periods except for the March period which is 4 cents lower.

Live and feeder cattle futures are slightly higher this morning amid tight supplies.

  • Futures continue to trade higher as traders wait for cash cattle trade to begin.
  • Adding support this morning is strength in the wholesale market. Choice boxed beef is up $2.49 per cwt. and Select beef is $2.98 per cwt. higher. Movement is a robust 123 loads.
  • Nearby contracts are aligned with last week's trade at $137 in the Southern Plains. Initial bids are at $135, which are countered by asking prices of $139.
  • Showlists are slightly tighter in Texas and Kansas, but market-ready numbers are up in Colorado and Nebraska.
  • Feeder cattle futures are higher on the decline in grain futures and efforts to align futures with the cash index, which is at nearly a $3 premium to nearby futures.

Lean hog futures are slightly higher on mild short-covering following yesterday's losses.

  • Some light short-covering is lifting hog futures this morning. Trading is limited, however, due to the nearly $6 premium futures hold to the cash index.
  • Damping buying interest is today's setback in the wholesale market. The pork cutout value fell $1.69 this morning but movement is a strong 353.25 loads.
  • Cash hog bids are steady to slightly lower today. Packers, who are still cutting in the black, are working to make up for plant closures or slowed production early this week. But supplies are also readily available as weather conditions are improving, which means they do not have to bid up to grab supplies.
  • Average hog weights rose 0.6 lb. last week in Iowa and southern Minnesota; the head count is down marginally from year-ago but up significantly from the week prior.
  • Futures traders continue to look for confirmation of a seasonal low in prices. Today's slight bounce is an early test of the $85.00 area as a support zone on the February contract.
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