Market Snapshot, Noon CT (VIP) -- February 14, 2013

February 14, 2013 06:03 AM
 

Corn futures continue to post slight losses across the board at midday.

  • Spillover from soybeans and sharp gains in the U.S. dollar index are keeping bears in control of the corn market today.
  • However, this morning's weekly export sales data is helping to limit pressure. Sales of 225,400 MT for 2012-13 and 59,300 MT for 2013-14 matched expectations and represent a 124,300-MT increase from the week prior. While still not strong, improvement from abysmal levels is welcome.
  • Strength in Gulf basis levels this morning may also signal export demand is improving.
  • Also, the U.S. ag attaché in China pegs the country's corn crop at 200 MMT (USDA estimates production at 208 MMT) and says U.S. corn imports could rise in the second half of 2013 if prices "are more competitive in coming months."
  • But expectations for a large South American corn crop to somewhat ease the tight supply situation remains a limiting factor for buyers.

 

Soybean futures have trimmed losses ahead of midday to trade 6 to 10 cents lower.

  • Ideas the downside has been overdone in the bean market considering razor-thin U.S. carryover supplies has helped soybeans move off their early lows.
  • But this morning's reminder that export demand is beginning to fade for U.S. soybeans is keeping beans in negative territory.
  • Order cancellations by China, unknown destinations and Israel resulted in a net sales reduction in weekly soybean export sales of 109,200 MT for 2012-13. Sales for 2013-14 were also relatively light at 345,000 MT.
  • Nevertheless, traders expect tomorrow morning's NOPA soybean crush report to reflect strong demand and to rise in January to 160.6 million bushels.
  • Dollar strength and broad risk aversion is also giving bears an edge.

 

Wheat futures have trimmed early losses. Chicago is roughly 5 to 6 cents lower. Kansas City is down 7 to 8 cents. And Minneapolis is mostly around 4 cents lower.

  • This morning's Weekly Export Sales Report reflected notable improvement in wheat demand as sales of 651,700 MT for 2012-13 and 54,600 MT for 2013-14 topped expectations.
  • But as U.S. wheat has long struggled to compete globally, traders will wait for "proof" export demand is improving before adding long positions.
  • In the meantime, traders are taking advantage of dollar strength by booking profits.
  • Rain in the forecast next week for winter wheat county is adding light pressure.
  • News Strategie Grains lowered its 2013 EU (including Croatia) wheat production forecast by 1.1 MMT to 132.2 MMT due to lower planted acreage in Britain and France is helping to limit pressure.
  • Also, the U.S. ag attaché in China estimates the country's wheat crop at 108 MMT due to concerns about head blight. USDA pegs Chinese wheat production at 120.6 MMT.

 

Live and feeder cattle futures have moved off their early lows to trade steady to sharply lower.

  • Heavy pressure on live cattle futures this morning has encouraged additional feedlots in Texas, Kansas and Nebraska to sell cattle at $123, which is steady with light trade earlier this week, but down $2 from the bulk of trade last week.
  • Initial pressure stemmed from concern about a possible halt to meat exports if meat inspectors are furloughed March 1, as USDA has indicated.
  • Early pressure took contracts through key levels of support, triggering sell stops and accelerating losses. Some are now covering short positions amid ideas the downside has been overdone.
  • Meanwhile, the boxed beef continues to give signs it may have put in a low. Choice cuts rose 6 cents and Select firmed 69 cents this morning. But movement slowed to 80 loads.
  • Countering this, however, are recent declines in weekly beef export sales tallies. USDA this morning reported weekly beef exports of just 7,300 MT for the week ended Feb. 7.
  • Weakness in the corn market and efforts to correct the technically oversold condition of the feeder cattle market has helped nearby feeders move off their lows.

 

February lean hog futures remain slightly higher while the rest of the market is posting moderate to sharp losses.

  • The February lean hog contract expires at noon CT today. Thus, traders are working to bring it in line with the cash hog index, which was most recently projected at $88.26.
  • Traders appear unconcerned with the nearly $3.70 discount the April contract holds to the cash hog index, signaling they anticipate more cash weakness ahead.
  • Spurring such ideas is the pork market's ongoing struggle to find a level that sparks demand.
  • The pork cutout value plunged $2.68 yesterday, though movement was strong. This is also limiting packer demand for cash hogs as it pulled margins deeper into the red.
  • Cash hog bids are steady to lower today. A few plants are preparing for a holiday-shortened week.
  • Outside markets are adding to the negative tone, as the dollar index is enjoying strong gains and the stock market is under light pressure. Crude oil futures are firmer, however.
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