Market Snapshot, Noon CT (VIP) -- February 22, 2013

February 22, 2013 06:08 AM
 

Corn futures have softened to favor a weaker tone in mixed trade.

  • Corn futures have softened on spillover from soybeans. Corn is hovering near weekly lows.
  • Early support in the corn pit came on this morning's better-than-expected weekly export sales report, but the softening of Gulf basis suggests demand has softened.
  • Weekly export sales of 361,800 MT for 2012-13 and 20,100 MT for 2013-14 were above expectations. Plus, Reuters reports Chinese feed mills have booked four cargoes (240,000 MT) of U.S. corn for 2013-14 this week.
  • Traders are also digesting news from USDA's Outlook Forum that USDA sees the potential for a 14.35 billion bu. Corn crop in 2013. USDA says there is little correlation between drought one year and reduced yields the next.

 

Soybean futures have softened to trade mixed, with nearbys 3 to 5 cents lower on profit-taking.

  • Soybean traders are opting to take some profits out of the market ahead of the weekend following sharp weekly gains.
  • Some pressure is also coming from news a planned dock worker strike in Brazil early next week has been canceled, although ships remained backed up at the ports.
  • Weekly export sales are also being attributed to price softening, as the report showed net sales reductions of 119,500 MT for 2012-13 and sales of 62,000 MT for 2013-14.
  • USDA also announced a 410,000 MT soybean sale to China, with 60,000 MT for 2012-13 and 350,000 MT for 2013-14, which also provided early support but is now on the backburner.
  • Traders are also digesting news from USDA's Outlook Forum, USDA said its 3.405 billion bu. crop projection is based on a yield of 44.5 bu. per acre and pegs carryover at 250 million bushels.

 

Wheat futures have softened, with Chicago steady to marginally higher, Kansas City marginally to 2 cents lower and Minneapolis mixed.

  • Wheat futures softened on spillover from weakness in the bean pit, although some contracts remain in positive territory on ideas recent losses are overdone.
  • Early support came after the weekly export sales report came in better than expected and signaled U.S. prices are once again competitive. The report showed sales of 699,300 MT for 2012-13 and 56,600 MT for 2013-14.
  • But traders say they want to see a continuation of strong demand news before they are convinced demand has turned the corner.
  • Traders are also digesting more details of the 2013-14 marketing year from USDA's Outlook Forum. USDA says planted wheat acreage of 56.0 million and a yield of 45.2 bu. per acre will produce a crop of 2.1 billion bu. and pegs carryover at 639 million bushels.

 

Live and feeder cattle futures remain slightly higher on short-covering as traders ready positions for this afternoon's Cattle on Feed Report.

  • Traders expect this afternoon's Cattle on Feed Report to reflect a sharp tightening of feedlot supplies. The report is expected to show On Feed at 93.8%, Placements at 100.3% and Marketings at 104.7% of year-ago levels to suggest a marketings hole is developing this spring.
  • Meanwhile, cash cattle trade is thought to be complete at $123 this week, which is steady with last week. February live cattle, however, are trading at around a $2 premium to the cash market.
  • Also supportive is a firmer tone from the boxed beef market. Choice values are up 39 cents and Select is up 33 cents on solid movement of 99 loads.
  • Feeder cattle futures are also getting a lift from short-covering, although buying is being limited by strength in the corn market.
  • At its outlook forum, USDA said it expects beef production this year to be down 3% compared to year-ago and for the average cash price to be well above year-ago at $134.

 

Lean hog futures have softened to mixed trade, with traders expecting plentiful supplies to be revealed from the Cold Storage Report.

  • Early gains gave way to profit-taking and lean hog futures have softened.
  • Traders are focused on evening positions ahead of this afternoon's Cold Storage Report, which is expected to show pork stocks at 608.2 million lbs. -- just shy of the January 2009 record.
  • But futures have moved into sharply oversold territory according to the 9-day Relative Strength Index, which suggests the downside is overdone.
  • The cash hog market is steady to $1 lower this morning amid lackluster demand for hogs. Plants were prepared for marketing disruptions today due to the winter storm.
  • Packers have seen profit margins improve dramatically this week, but demand for cash hogs remains light.
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