Market Snapshot, Noon CT (VIP) -- February 4, 2013

February 4, 2013 06:09 AM
 

Corn futures have seen bouts of profit-taking this morning. Futures are currently favoring the downside.

  • Selling interest in corn futures remains limited by concerns about generally disappointing rains in Argentina and southern Brazil this weekend along with a forecast for building heat and dryness this week.
  • But this morning's Weekly Export Inspections Report deflated bullish enthusiasm as 5.348 million bu. in weekly export inspections were down nearly 15.8 million bu. from the week prior and well below expectations.
  • Gulf basis has been mixed today. At midday, basis firmed a penny for immediate delivery but fell a penny for March shipment.
  • Sharp gains in the U.S. dollar index and heavy losses in the U.S. stock market are adding light pressure.

 

Soybean futures have eased off earlier highs but are still 11 to 15 cents higher in most contracts.

  • Early gains in the soybean market and strength in the U.S. dollar index has encouraged some light intra-day profit-taking in the bean market at midday.
  • But that is the extent of selling interest as the near-term forecast for southern Brazil and Argentina calls for heat and dryness.
  • Also, the market was again reminded of impressive soy export demand today. Weekly export inspections of 53.892 million bu. came in well above expectations and advanced the pace of inspections to 32.5% ahead of year-ago. USDA expects bean exports in 2012-13 to be down 1.2% from the previous marketing year.
  • Adding to this supportive demand news, USDA today announced China bought 58,000 MT of soybeans for 2012-13 delivery and 58,000 MT for 2013-14 delivery.
  • Soybeans are also benefiting from some technical buying today.

 

Wheat futures have softened to post 2- to 4-cent losses in Chicago with Kansas City wheat 5 to 8 cents lower and Minneapolis wheat fractionally to 2 cents lower.

  • Wheat futures softened along with corn ahead of midday. Dollar strength is encouraging of profit-taking.
  • Light pressure also stems from a disappointing weekly export inspections tally of 15.206 million bushels.
  • Adding to the negative tone, Kazakhstan's ag ministry says it expects to export 7.8 MMT of grain in 2012-13, which is up from its previous forecast of 7 MMT.
  • Late-week rain chances for winter wheat country is also limiting buying interest.
  • Two- to 4-cent gains in Gulf basis levels at midday could signal some export buying is occurring. This is limiting pressure.

 

Live cattle futures continue to post slight to moderate gains at midday. Feeder cattle futures are moderately lower.

  • Traders are focused on factoring Friday's Cattle Inventory Report into prices. The report showed both that the cattle heard and calf crop as of Jan. 1 was smaller than expected and that the market is on track to hit a cycle high in 2013 as herd expansion has started.
  • Last week, cash cattle trade took place at mostly $125 in the Southern Plains and at $125 to $127 at more northern locations. The front-month contract is trading near the top of this range as traders await showlist estimates for this week.
  • A continued lackluster performance in the boxed beef market is also limiting gains. Choice cuts slid 42 cents this morning and Select cuts fell 3 cents. Movement was solid, however, at 118 loads. Recent declines have resulted in deeply negative packer profit margins.
  • Recent weakness in the boxed beef market has the market concerned consumers may turn to cheaper pork and poultry products as most Americans are seeing a rise in both taxes and gas prices in 2013.
  • Negative outside markets and recent strength in the corn market are weighing on feeder cattle futures.

 

Lean hog futures have softened to post slight to moderate losses.

  • Cash hog bids are mostly firmer this morning, with some locations paying sharply higher prices as packers work to book needs after two winter storm events last week in the Midwest that were followed by frigid temp disrupted transportation.
  • But futures have failed to respond to cash strength, as traders recognize this will pull packer profit margins deeper into the red, limiting demand going forward.
  • On Friday, the pork cutout value rose $1.77, though movement was relatively light. But the market is aware the pork market has struggled to string together consecutive gains.
  • Strength in the U.S. dollar index is also encouraging some profit-taking after last week's impressive gains.
     
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