Market Snapshot, Noon CT (VIP) -- February 10, 2014

February 10, 2014 06:17 AM
 

Corn futures are fractionally mixed with old-crop contracts favoring the plus side and new-crop contracts favoring the negative side.

  • Corn futures have trimmed initial gains following the positively viewed USDA reports and a weaker U.S. dollar index. The news sent March futures to their highest level since Nov. 12.
  • However, weakness in soybean futures is limiting gains.
  • USDA's monthly update of supply and demand fundamentals caught traders by surprise as it showed lower projected ending stocks due to stronger-than-expected exports. USDA pegged 2013-14 carryover at 1.481 billion bu., down from the pre-report estimate of 1.606 billion. The figure is still higher than last year's 821 million bu., however.
  • Futures were already trading firmer on news weekly corn export inspections totaled 695,181 MT for the week ending Feb. 6. The figure is well above expectations and 132,449 MT higher than the previous week.
  • News that Iowa corn acres may drop 2.2% to 13.3 million acres in 2014, according to a survey by the Iowa-Nebraska Equipment Dealers Association and Agrisource Inc., is also seen as supportive.
  • Gulf corn basis is unchanged in midday trading.

 

Soybean futures are 1 to 6 cents lower through the August contract and 1 to 5 cents lower in deferred contracts.

  • Soybean futures are reacting negatively to today's USDA Supply & Demand Report which saw USDA leave its projected 2013-14 soybean carryover unchanged at 150 million bushels. Traders had expected a cut of 7 million bu. from USDA's January figure.
  • Traders had expected USDA to raise its export forecast because no large Chinese soybean order cancellations have yet been reported. The lack of change increases trader concerns these export cancellations will eventually occur.
  • AgRural left its Brazilian soybean production forecast at 88.8 MMT, but the consultancy did note that recent heat and dryness could hurt late-planted beans and that if conditions do not soon improve, it will lower its forecast.
  • However, USDA increased its peg of the Brazilian crop to 90 MMT, slightly higher than pre-report estimates, and lowered its Argentine estimate to 54 MMT, slightly under expectations.
  • Traders also note isolated rain is in the forecast for key production regions of Brazil this week, though the especially dry southeast area of Brazil is not expected to see rain until after Feb. 15.
  • Traders are shrugging off today's strong weekly export inspections report which showed 1.551 MMT were inspected through the week ending Feb. 6. That was well above pre-report expectations and 360,439 MT higher than the previous week.
  • Traders are also reacting negative to news the Iowa-Nebraska Equipment Dealers Association and Agrisource Inc. showed soybean acres in Iowa for the 2014 growing season are expected to rise 11% to 10.3 million acres. Nationally, it expects soybean acreage to rise 6.8% to 81.75 million acres.
  • Gulf soybean basis is unchanged in midday trading with the exception of the March delivery period, which is 3 cents higher.

 

Wheat futures are 6 to 13 cents higher, with nearby HRW futures leading price gains.

  • Wheat futures are higher on today's favorable USDA Supply & Demand Report and strong weekly export inspections.
  • USDA surprised the market by cutting projected 2013-14 carryover supplies by 50 million bu. rather than the pre-report expectations of 7 million bushels.
  • Also supporting wheat futures this morning is the strong weekly export inspections figure of 446,197 MT, which is above expectations and 117,569 MT higher than the previous week.
  • Ukraine's ag ministry says the country exported 22 MMT between July 1, 2013 and Jan. 27, 2014, a 33.3% increase over the year prior. The ministry expects the country's exports for the 2013-14 marketing year will rise from 23 MMT last year to 32.5 MMT.
  • Gulf SRW and HRW wheat basis continue to trade steady at midday.

 

Live cattle futures are slightly weaker except in the February contract. Feeder cattle futures are slightly higher.

  • Traders are reluctant to push prices in either direction due to the lack of direction for cash trade.
  • Cash cattle traded extremely light last week at mostly $142 in the Southern Plains and at $140 to $141 in northern locations. This was $3 to $5 below prices the week prior and nearby contracts are already in line with these prices.
  • Packers continue to bid lower as they face cutting margins that are more than $100 in the red.
  • Choice and Select boxed beef cuts are mixed this morning with Choice 22 cents higher but Select 20 cents lower. Movement was slightly stronger at 82 loads.
  • Traders expect heavier showlists this week, but another week of adverse weather will again stress livestock.
  • Feeder cattle futures are slightly higher as corn futures have trimmed early gains from today's USDA reports.

 

Lean hog futures are mixed with nearby contracts slightly lower and deferred contracts slightly higher.

  • Nearby futures are slightly higher on reaction to the initial boost in corn futures from today's USDA reports and on spillover from the thin cattle futures trade.
  • However, cash hog bids are mixed today, as some areas are having no trouble securing supplies while bitter cold is making some producers unwilling to market supplies.
  • The pork cutout posted a 20-cent gain this morning. Movement is a somewhat restrained 142.81 loads, however.
  • Traders are working to narrow the $2 premium that exists between February futures and the cash hog index. The index is rising, however. Contract expiration is Friday.
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