Market Snapshot, Noon CT (VIP) -- February 4, 2014

February 4, 2014 06:13 AM
 

Corn futures are trading 4 to 5 cents higher in most contracts.

  • Corn futures are higher on followthrough buying after a number of contracts hit or tested 2014 highs yesterday.
  • Gains in old-crop soybean futures are adding spillover support.
  • However, strength in the U.S. dollar index is tempering gains.
  • March futures have traded above the December high of $4.40 3/4, penetrating a seven-day resistance area.
  • Prices are moving higher on ideas demand is being rebuilt at a healthy pace, but some traders worry a rise in prices could crimp the burgeoning demand.
  • Light support also comes from news Informa Economics lowered its outlook for the 2013-14 Brazilian corn harvest by 1 MMT from its previous estimate and decreased its projected Argentine corn crop by 2.4 MMT because of heat and drought.
  • Gulf basis is steady at midday with the exception of June delivery, which is 3 cents higher.

 

Soybean futures are 12 to 20 cents higher in old-crop futures, while September is up 9 cents and new-crop futures are 3 to 4 cents higher.

  • Bull spreading continues to dominate today's action as traders balance continuing near-term strong demand versus projections of an increase in 2014 planted soybean acres.
  • Today's gains are coming despite an increase in the U.S. dollar index.
  • Technical buying kicked in as the March contract moved through psychological resistance at $13.00. Futures are probing the next level of resistance which runs form $13.10 to the January high of $13.30 1/2.
  • The lack of cancellations from China so far despite the start of shipping from Brazilian ports is supporting today's rise in prices.
  • However, private forecaster Informa Economics today increased it projection of Brazil's soybean harvest by 1 MMT due to "slightly better yield potential," but it lowered its projected Argentina soybean crop estimate by 500,000 MT. The firm says 6% of the nation's soybean crop has been harvested.
  • Gulf soybean basis is steady for February and March delivery, 2 cents higher for April delivery and 1 cents lower for May delivery.

 

All three wheat flavors are posting double-digit gains with HRW pacing gains.

  • Traders are growing increasingly concerned about the HRW wheat crop as this winter's arctic temperatures continue to spread over the region. However, the most recent cold wave is also expected to bring some protective snowcover along with it.
  • Adding to concerns are state crop condition updates that reflect significant deterioration to the winter wheat crops in Texas, Kansas and Oklahoma.
  • In Texas, the amount of wheat rated "poor" to "very poor" rose 4 percentage points to 41%. In Kansas, 20% of the crop is rated "poor" to "very poor" -- a 14 percentage point increase from last month. And 24% of the Oklahoma crop is now rated in the bottom two categories.
  • Traders are shrugging off news Informa Economics boosted its Argentine wheat crop estimate by 200,000 MT from its previous estimate. The firm also said it expects India will harvest 2.4 MMT more wheat than it projected earlier due to larger seedings.
  • Statistics Canada reports total wheat stocks as of Dec. 31 at 28.381 MMT, which is the highest in 20 years, but below the average pre-report trade guess of 28.9 MMT.
  • Gulf SRW and HRW wheat basis is unchanged at midday.

 

Live cattle futures are trading steady to slightly weaker in the front four contracts and slightly higher in the October and December contracts. Feeder cattle futures are slightly lower as well.

  • Live cattle futures are trading with a slight negative bias in thin trading as traders sort through the sharp drop in wholesale beef prices.
  • However, today's wholesale trading saw Choice beef moving $1.24 higher while Select beef gained 89 cents. Movement is still light at 52 loads. The light movement has traders concerned the quick, sharp rise in wholesale prices will sharply curb retail demand.
  • February futures continue to trade $4 to $5 below last week's cash cattle trade at $144 to $145 in the Southern Plains, which suggests much of the correction has already been priced into futures.
  • Showlist estimates are down this week and another winter storm is likely to make transportation difficult, which has traders thinking available supplies will be reduced.
  • Very light cash cattle trade took place in Texas yesterday ahead of the winter storm event at $142.50, but active trade is not expected until late-week.
  • Feeder cattle futures are lower on gains in corn futures and the U.S. dollar index.

 

Lean hog futures continue to mark small gains this morning.

  • Lean hog futures are slightly higher on corrective short-covering amid ideas the market is heavily oversold.
  • The cash market continues to firm, which is offering support to the March futures contract. The premium that contract held to the cash index has been reduced to about $3.
  • Another winter storm is supporting cash hog bids, but countering that will be reduced slaughter schedules due to difficult travel conditions.
  • Today's wholesale pork market is also offering light support. The pork cutout rose 39 cents in morning trade, but movement is on the light side at 175.27 loads.
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