Market Snapshot, Noon CT (VIP) -- February 21, 2014

February 21, 2014 05:59 AM
 

Corn futures are 1 to 2 cents lower through the July 2015 contract.

  • Corn futures are lower but have trimmed earlier losses on spillover strength from soybeans.
  • Futures moved lower after opening weaker on disappointing weekly export sales and projections of a record large corn harvest in 2014 outlined at USDA's Ag Outlook Forum projections.
  • Traders were disappointed by today's weekly corn sales of 691,400 MT for 2013-14, which were below expectations. Exports of 745,000 MT were down 22% from the previous week. Net sales were down 46% from the previous week and 50% from the prior 4-week average.
  • The slowdown in sales triggers worries the recent runup in corn prices may shut off export interest.
  • However, Gulf basis today has shown strength with gains of 1 to 2 cents for immediate and March delivery. That boost offset some of the concerns from the weekly corn sales report and helped to trim early losses.
  • Traders continue to digest USDA's full 2014-15 S&D tables, which were released this morning at its Outlook Forum. USDA projects 2014-15 carryover to rise to 2.111 billion bushels.
  • Technical traders continue to watch how March futures perform at the $4.50 area, which is now acting as a support zone.
     

Soybean futures are 3 to 10 cents higher through the July 2015 contract.

  • Soybean futures have moved higher on signs of a firm Gulf basis market after a disappointing export sales report.
  • This morning's weekly export soybean sales report were disappointing at 86,300 MT for 2013-14, which are a marketing-year low. But combined with sales of 749,100 MT for 2014-15, total weekly export sales were within the pre-report guess range.
  • Soybean exports topped 1.3 MMT, with China the top destination. The report notes China canceled 145,600 MT of old-crop beans.
  • Traders turned more positive about potential exports as Gulf basis levels held firm, hinting more export news is ahead.
  • In addition, news of rising shipping delays at Brazilian ports has traders downgrading chances for immediate cancellations of export sales by China.
  • USDA, at its annual Outlook Forum, projects a 2014 soybean crop of 3.55 billion bu., and 2014-15 carryover at 285 million bushels.
     

Wheat futures are generally 3 to 7 cents lower for all three flavors.

  • Wheat futures are lower on corrective action and building concerns wheat prices may be once again becoming uncompetitive on the globally market.
  • Today's weekly wheat export sales came in within expectations at 424,500 MT for 2013-14 and 67,000 MT for 2014-15. But exports were a new marketing-year low.
  • USDA today, at its annual outlook conference, projected the 2014 wheat crop at 2.16 billion bu. and 2014-15 carryover at 587 million bushels.
  • The March SRW wheat futures contract is again testing support at the $6.10 area.
  • Gulf HRW wheat basis is steady in midday trading after firming in early trading.

 

Live cattle futures continue to trade choppy with the lead February, August and October contracts slightly higher and the April, June and far deferred contracts slightly weaker. Feeder cattle are also mixed.

  • Trading continues to be limited today as traders prepare to this afternoon's key reports.
  • Cash trade has yet to start, but traders are looking for higher prices as the wholesale market has firmed and numbers may be limited due to the recent storm.
  • Adding support is continued strength in the boxed beef market which saw both Choice and Select boxed beef prices rise 46 cents this morning. Movement is a light 72 loads.
  • Traders are evening positions ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 96%, Placements at 102.6% and Marketings at 95.4% of year-ago.
  • The Cold Storage Report this afternoon is expected to show beef stocks at the end of January up marginally from December, but 9% below year-ago.
  • Feeder cattle futures are weaker as traders even positions ahead of this afternoon's reports.

 

Lean hog futures are slightly higher with the exception of the July contract, which is slightly weaker. However, the lead April contract is more than $1.00 higher.

  • April lean hog futures gapped higher at the open, posting a new contract high on followthrough buying, and have continued to hold onto those early gains.
  • Cash prices are stronger as packers, operating with profitable cutting margins, have had to bid up for hogs all week to keep kill lines running at full capacity.
  • Cash hogs are as much as $1.00 higher in some locations, which is supporting the April futures contract. However, that contract is now at nearly a $10 premium to the cash hog index.
  • Traders continue to ignore the overbought warnings being flashed by the Relative Strength Index, but the warning exists, nevertheless..
  • Concerns about the spread of PEDV continue to offer underlying support for contracts.
  • Traders expect this afternoon's Cold Storage Report to show pork stocks at the end of January up 9.3% from last month and in line with year-ago levels.
  • The pork cutout slipped 30 cents this morning after a surge of $2.88 yesterday. Movement is on the light side at 132.15 loads.
     
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