Market Snapshot, Noon CT (VIP) -- February 25, 2013

February 25, 2013 05:59 AM
 

Corn futures remain split, with old-crop futures fractionally to 2 cents higher and deferred months mostly fractionally lower.

  • While this morning's weekly export inspections tally of 11.567 billion bu. came in well below lofty expectations, the tally was up roughly 1.9 million bu. from the week prior.
  • This has some optimistic tepid export demand is improving slightly. Boosting this idea, USDA announced a 127,000-MT corn sale to an unknown destination this morning. Of the total, 50,800 MT is for 2012-13 and 76,200 MT is for 2013-14.
  • But the winter storm event is adding to ideas production will recover in 2013-14, which is weighing on new-crop corn futures.
  • Outside markets are also limiting buying interest, as the U.S. dollar index has moved back into positive territory while the stock market has turned lower.

 

Soybean futures have softened to trade roughly 14 to 19 cents lower in old-crop futures, while deferred months are seeing slightly lighter losses in most contracts.

  • Profit-taking in the soybean market picked up after the Weekly Export Inspections Report showed a marked pullback from the week prior. Inspections of 27.284 million bu. came in well below expectations.
  • This reminds traders demand for U.S. soy products will soon slow.
  • Adding to such ideas was favorable rain in Argentina this weekend and rain in the forecast for southern Brazil this week.
  • South American supplies are expected to hit the market very soon, barring any transportation disruptions such as a dockworker strike. This is a very real threat, however, which will keep selling in check for the time being.
  • Traders are ignoring another daily soybean sales announcement from USDA this morning, signaling a new source of support is likely needed. China bought 120,000 MT of U.S. soybeans for 2013-14.

 

Wheat futures have softened to trade mostly 6 to 10 cents lower at all three locations, continuing their recent downtrend.

  • Heavy rain and snow in the Southern and Central Plains is pressuring the wheat market.
  • Wheat export inspections of 21.167 million bu. fell short of expectations, but the tally did help the commutative wheat inspections pace gain relative to year-ago.
  • Spillover from soybeans and a now-firmer U.S. dollar index are adding pressure.
  • May Chicago heat futures so far have been held by the psychological $7.10 level, but are working on another downside day of trade on the daily chart to do more technical chart damage.

 

Live cattle futures have softened to mixed trade. Feeder cattle futures have also softened to post slight to moderate losses.

  • The storm on the Plains is giving nearby live cattle futures a boost as it tightens supplies over the near-term and could limit animal weight gain.
  • Friday's Cattle on Feed Report is also encouraging some bull spreading as it showed Marketings and Placements above year-ago levels, while On Feed came in at 94% of year-ago levels.
  • Plus, the boxed beef market is off to a favorable start for the week. This morning, Choice and Select values rose 36 cents and 10 cents, respectively, while movement was decent at 93 loads.
  • Late-week cash cattle trade took place at $125 on Friday, which was up $2 from trade earlier in the week. Traders will await showlist estimates before forming cash cattle opinions this week.
  • Outside markets have reversed course. The dollar is now firmer while the stock market is now under pressure.
  • This along with strength in the corn market has encouraged profit-taking in feeder cattle futures.

 

Lean hog futures have softened to post losses ranging from slight to sharp.

  • Mostly lower cash hog bids today are weighing on lean hog futures.
  • Plus, Friday's Cold Storage Report reminded traders that frozen pork stocks remain well above year-ago levels.
  • The pork market is also giving bulls little to get excited about, as prices and movement failed to impress Friday.
  • The approaching storm is not expected to significantly disrupt production in the Corn Belt, as it is expected to cover a relatively narrow swath of the region.
  • Pressure on the front-month contract is being limited by the around $1.50 discount it hold to the cash hog index.
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