Market Snapshot, Noon CT (VIP) -- February 25, 2014

February 25, 2014 06:19 AM
 

Corn futures are fractionally to 2 cents higher after working lower most of the morning.

  • Profit-taking and spillover weakness from wheat pressured corn futures this morning. But a weaker U.S. dollar index, stronger soybean futures and technical buying has trimmed early losses and moved prices to the plus side.
  • Technical traders stepped in as the $4.45 area in the March contract offers support.
  • While export news is lacking from USDA this morning, firmness in Gulf basis has traders looking for more positive export news later this week.
  • Around midday, Gulf corn basis is steady for immediate and May delivery, a penny higher for March and April delivery, a penny lower for June delivery and 2 cents higher for July delivery.
  • Talk USDA's 2014 record corn yield projection is too optimistic is also a source of underlying source.

 

Soybean futures continue to gain momentum and are 5 to 10 cents higher with old-crop futures leading gains.

  • Early losses from light profit-taking were quickly trimmed as the charts remain bullish and export news remains positive and news of Chinese export cancellations remain absent.
  • USDA announced an unknown destination purchased 568,000 MT of old-crop U.S. soybeans, which could reflect some nervousness about logistical issues in Brazil.
  • Also, damage to a shiploader at Brazil's second largest soy port could further disrupt shipping of the nation's crop.
  • News some wheat export sales have been canceled were mistakenly taken as soybean sales cancellations. Prices firmed in relief as USDA confirmed the cancellation involved U.S. wheat, not U.S. soybeans.
  • Some light profit-taking occurred early as traders note the March contract is nearing the contract high at $13.99 3/4 and psychological resistance at $14.00. Breaking through that resistance is expected to be difficult for bulls.
  • Mild bull-spreading continues on expectations of record production this year.
  • Gulf soybean basis is steady at midday.

 

SRW wheat futures have turned mostly negative after a brief turn to the plus side. HRW wheat futures are higher with the exception of the March contract. HRS futures are fractionally to 7 cents higher for the most part.

  • Wheat futures suffered hefty early losses on news of an export cancellation, but the HRW and HRS markets have since rallied and SRW wheat has trimmed early losses.
  • News Egypt canceled 110,000 MT of U.S. SRW wheat for 2013-14 prompted the early selloff this morning. That news confirmed trader worries U.S. wheat had become uncompetititvely priced in the global market.
  • Profit-taking also contributed the early losses.
  • Traders are also encouraged by the fact that bitter cold is expected to remain isolated to the Northern Plains.
  • Weakness in the U.S. dollar has come back to lift prices along with technical buying as the early selloff failed to trigger followthrough selling and March SRW futures found buying support just above $6.00.
  • Gulf SRW and HRW basis is steady at midday after trading lower in the early trade.

 

Live cattle futures have improved to post slight to sharp gains. Feeder cattle futures are slightly to moderately firmer.

  • Strength in wholesale beef prices continues to lift live cattle futures.
  • Choice boxed beef rose 45 cents this morning while Select beef surged $1.14. This follows strong gains yesterday. However, movement is slow at 68 loads.
  • Traders worry the slow beef movement on higher prices may be a sign of a pending top in the cattle market.
  • April live cattle futures are again probing resistance around $141.25.
  • Packers appear to the have the advantage in cash negotiations this week as showlist estimates are up overall this week, with gains in Kansas and Texas offsetting declines in Nebraska and Oklahoma.
  • April live cattle are trading in line with the upper end of last week's trade in the Southern Plains.
  • Feeder cattle futures are higher on the strength in live cattle futures, with the March contract trading in line with the cash index.

 

Lean hog futures are trading with the upward bias except for the May contract, which is slightly weaker. April futures are leading gains with trades above $1.00.

  • The April lean hog contract has set a new contract high and continues to trade there. The chart picture remains bullish, but the market is obviously overbought and vulnerable to a setback.
  • Strength in the product and cash markets is tending to support all contracts.
  • Traders are shrugging off news the pork cutout value slipped 71 cents this morning on strong movement of 213.22 loads as the market firmed $1.23 yesterday.
  • Packers continue to cut in the black and are bidding up to keep kill lines running for full capacity and in preparation for a large weekend kill.
  • Traders remain concerned about the spread of the porcine epidemic diarrhea virus (PEDV) and its impact on spring and summer marketings when supplies are tightest of the year.
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