Market Snapshot, Noon CT (VIP) -- Advice -- January 27, 2014

January 27, 2014 05:59 AM
 

Cotton producers: Increase 2013-crop cash sales, make initial 2014-crop sale... Cotton futures are rolling over after an extended price recovery. Therefore, it's time to reward the rally with sales. Hedgers and cash-only marketers are advised to make a 25% 2013-crop cash sale to get to 75% priced on old-crop. Hedgers and cash-only marketers are also advised to sell the first 25% of expected 2014-crop production via cash forward contract for harvest delivery.

 

Corn futures are mostly 2 cents higher.

  • Corn futures have traded in a narrow range on either side of unchanged today as fresh news is lacking. Futures are favoring the upside thanks to some reminders of rebuilt demand.
  • USDA announced a daily sale of 119,888 MT to an unknown destination for 2013-14.
  • Also, weekly corn export inspections of 28.701 million bu. represent solid demand. The tally came within the average pre-report guess range.
  • Gulf basis rose a penny for January and February delivery at midday, possibly signaling more demand news is ahead.
  • But on the other hand, recent rains in Argentina have reduced crop concerns, despite the forecast for temps to again rise this week.

 

Soybean futures are 2 to 8 cents lower this morning.

  • After getting off to a mixed start thanks to some bull spreading, soybean futures softened amid profit-taking. The market is also seeing some spreading activity with corn today.
  • Traders are focusing on news Brazil's shipping agent SA Commodities reports the country will ship a record 2.5 MMT of soybeans in February. This reminds that Chinese order cancellations are possible, especially if Brazil has no shipping troubles.
  • However, today's surge in export inspections of soybeans shows this is not yet occurring. Soybean export inspections of 73.839 million bu. topped expectations, week-ago and year-ago by wide margins.
  • In addition, USDA announced an 183,000 MT soybean sale to an unknown destination for 2014-15.
  • Meanwhile, China's Ministry of Commerce has raised its January soybean import forecast (again) to 5.27 MMT from 4.61 MMT. The ministry expects imports to slip to 3.42 MMT in February.

 

Wheat futures have improved to mixed trade in all three flavors at midday.

  • Traders are weighing a reminder of lackluster export demand for U.S. wheat against crop concerns in winter wheat country.
  • An arctic blast could be compromising winter wheat crop in the northern and central Plains today as much of it lacks protective snowcover. Plus, cold air along with snow, freezing rain and sleet are moving into the Southern Plains.
  • But on the other hand, weekly wheat export inspections of 14.037 million bu. came in just above the lower end of expectations. The tally was far from impressive and down from week- and year-ago.
  • The wheat market is also benefiting from mild gains in the corn market.

 

Live cattle futures have improved to mixed trade. Feeder cattle futures continue to post moderate losses.

  • The cattle market was initially pressured by reactions to USDA's Cattle on Feed (COF) Report Friday, which showed all three categories on the negative side of the pre-report trade guesses.
  • But some mild short-covering returned on signs the boxed beef market could still have a bit of life remaining in its record-setting rally. This morning, Choice cuts rose $1.05 and Select firmed $2.37, narrowing the spread between the cuts to 31 cents, premium Choice. Movement was light at 60 loads, however.
  • Light support also comes from yet another blast of cold weather on the Plains and Midwest and the forecast for snow and ice in the south. This is again slowing cattle weight gain and could give feedlots some leverage in cash negotiations.
  • Traders will watch the beef market and showlists before forming cash expectations.
  • Last week, trade took place at mostly $147 on the Southern Plains and at $150 in Nebraska. Futures are well below these prices.
  • Feeder cattle futures are being pressured by strength in the corn market as well as signs from the COF report that more calves from Canada and Mexico are making their way into the United States.

 

Lean hog futures remain narrowly mixed at midday.

  • Traders are uncertain about near-term price direction, which is being reflected by light, choppy trade today. The market has consolidated in recent sessions.
  • Frigid temps and poor road conditions are keeping cash hog bids mostly steady with a few higher bids today. Some plants are thought to be operating with reduced hours today.
  • Meanwhile, the pork cutout value firmed 47 cents today, but movement was light at 143.75 loads. Traders remain hopeful that lofty beef prices will lift consumer pork demand.
  • While the cash hog index continues to rise, the February contract is still more than $4 above the cash market.
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