Market Snapshot, Noon CT (VIP) -- February 12, 2014

February 12, 2014 06:11 AM
 

Corn futures have softened to post fractional losses in old-crop contracts while new-crop futures are narrowly mixed.

  • Buying and selling interest is limited in the corn market as market-moving news is limited. Spillover from the soybean market and mild dollar strength are giving bears a slight advantage.
  • But on the other hand, selling interest is limited ahead of USDA's weekly export sales update Thursday. Recent reports have reflected strong demand.
  • Gulf basis firmed this morning and at midday for near-term delivery, signaling more demand news may be ahead.
  • Also pointing to stronger domestic demand, ethanol production rose 7,000 barrels per day (bpd) the week ended Feb. 7 to 902,000 bpd. However, stocks also rose by 323,000 barrels to 17.06 million barrels.

 

Soybean futures continue to post losses around 3 to 7 cents with old-crop futures leading to the downside.

  • News China canceled 272,000 MT of U.S. old-crop soybean purchases this morning continues to pressure the soybean market. Traders expect more Chinese order cancellations as the nation will turn to Brazilian beans as supplies become more readily available.
  • Traders will monitor tomorrow's Weekly Export Sales Report for any other signs of Chinese order cancellations.
  • USDA also announced China purchased 240,000 MT of U.S. soybeans for 2014-15 delivery.
  • Gulf soybean basis jumped another 5 cents for immediate delivery following a 2-cent rise this morning. This signals more export demand news may lie ahead.
  • According to official customs data from China, the country imported 5.91 MMT of soybeans in January. While this is down 20.1% from December, it's still 23.7% more than year-ago.
  • Traders are brushing off the forecast for dry weather across Argentina's main production regions today through the weekend. Brazil, on the other hand, is expected to see beneficial rains over the next 10 days. This would slow harvest efforts, however.

 

SRW wheat futures are slightly lower, while HRW futures are mixed with an upside bias. HRS wheat is 3 to 5 cents higher, with the exception of the front-month contract, which is fractionally lower.

  • Wheat futures remain pressured by a stronger U.S. dollar index and weakness in both corn and soybean futures.
  • The market is also seeing some light profit-taking after recent gains.
  • A warm-up in the days ahead is expected to melt protective snowcover in winter wheat country. This raises some winterkill concerns since temps at night are expected to dip.
  • In addition, the forecast for the Central and Southern Plains remains dry, keeping drought concerns close at hand.
  • Ongoing transportation problems have limited Japanese purchases of Canadian wheat this winter and are providing support for deferred HRS futures.
  • Gulf SRW basis rose 5 cents for April and May delivery. This follows a 5- to 10-cent jump in Gulf SRW basis for February and March delivery this morning. This suggest demand news likely lies ahead.

 

Live cattle futures have softened to trade slightly lower through the August contract, while far-deferred months remain slightly higher. Feeder cattle futures are posting slight losses.

  • Expectations for steady to lower cash cattle trade this week after very light trade at $140 to $142 last week are limiting buying interest in the live cattle market.
  • Feedlots have passed on some early cash cattle bids at $141 in Kansas and Texas, which would be steady with light sales in the area last week.
  • While heavier showlists and negative packer margins point to lower trade, the boxed beef market has given some signs it may be nearing a low.
  • This morning, Choice boxed beef cuts dipped 22 cents and Select fell 76 cents, but this does represent a slowdown in the pace of declines. Plus, morning movement improved notably to 125 loads.
  • There are also concerns demand could slow as the storm moves to the East Coast.
  • Strength in the U.S. dollar index and losses in live cattle are pressuring feeder cattle futures.

 

Lean hog futures are mixed at midday.

  • Cash hog bids are mostly steady with a few firmer bids today, but the cash market is expected to soften going forward as some plants are closed Monday for President's Day.
  • Improvement in the product market is encouraging some mild buying interest. The pork cutout value jumped $1.00 this morning. Even more impressive, movement picked up to 282.38 loads.
  • Traders are hopeful the cash and product markets will continue to improve as supplies tighten. Average hog weights in Iowa and southern Minnesota slipped 0.6 lbs. for the week ended Feb. 8, but they are still 5.3 lbs. heavier than year-ago.
  • Buying in the front-month contract is being limited by the slight premium it holds to the cash hog index ahead of its expiration Friday. The April contract is facing pressure as it holds a $10 premium to the index.
     
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