Market Snapshot, Noon CT (VIP) -- February 5, 2014

February 5, 2014 06:10 AM
 

Corn futures continue to trade fractionally to 3 cents lower in very narrow trading this morning.

  • Corn futures continue to trade in a very narrow range in mostly corrective action as traders pocket profits after the recent runup in prices.
  • March futures failed to push above yesterday's high but are finding support at the December high, which futures penetrated by 1 1/4 cents Tuesday.
  • The market is gaining light support on USDA's announcement an unknown buyer purchased 185,928 MT of old-crop corn and 50,800 MT for 2014-15, signaling demand has not yet slowed.
  • Countering that is light pressure from news ethanol production for the week ended Jan. 31 declined 5,000 barrels per day (BPD) to 895,000 bpd. Ethanol stocks fell 193,000 barrels to 16.74 million barrels.
  • The weaker U.S. dollar index is also supplying light support.
  • Gulf corn basis is steady at midday with the exception of the 1-cent lower bids for June and July delivery. Basis for February delivery slipped 3 cents in early morning trading.

 

Soybean futures have again moved to the plus side after trimming gains mid-morning.

  • Soybean futures opened higher, trimmed gains on profit-taking after moving to their highest level since Jan. 16 and have moved back to the plus side as the U.S. dollar weakened after trading higher briefly.
  • March futures are finding support at about the $13.10 level, keeping futures in the upper range of yesterday's range.
  • Futures moved higher earlier on rising concerns over continuing high temperatures and dryness in southern regions of Brazil.
  • Traders are also encouraged China has not yet announced any significant U.S. soybean order cancellations even as the Brazilian shipping season gets under way. However, the lack of market news from that country may be due to its extended Lunar New Year celebration.
  • Tomorrow's Weekly Export Sales Report will give traders an update on any order cancellations.
  • Gulf soybean basis firmed 1 penny for February delivery with other delivery period unchanged at midday.

 

Wheat futures continue to trade 1 to 6 cents higher following a weaker opening.

  • Wheat futures have moved higher after experiencing profit-taking in the overnight trade and at the start of the daytime session.
  • The profit-taking came following Tuesday's strong gains and the arrival of extensive snowcover over exposed winter wheat overnight. The improved snowcover will likely provide protection from the cold temperatures now sweeping over the region.
  • A weaker U.S. dollar index is offering light support.
  • March SRW wheat futures have moved above yesterday's high and are testing resistance at the $5.90 area, with $5.80 seemingly offering support.
  • Gulf HRW and SRW wheat basis is unchanged at midday.

 

Live and feeder cattle futures continue to record slight gains in most contracts.

  • Light short-covering is the main feature today following the declines of the three previous session.
  • The slight bounce in narrow trading comes as the wholesale market again records losses. Choice beef is down $3.63 and Select is down $2.03 in morning trading. However, movement has increased to 110 loads.
  • Some traders now look for cash prices to hold steady versus last week. With cash prices coming in around $144 to $145 last week and both February and April futures trading at a $4 to $5 discount to those levels, some traders have decided to take profits and wait on development of cash trade this week.
  • The tough winter weather is also cited as a supportive factor as it is stressing cattle and reducing weight gain.
  • Packers are less aggressive as the recent drop in boxed beef prices has dropped packer profit margins back into the red.
  • Light short-covering is also boosting feeder cattle futures.

 

Lean hog futures continue to trade moderately to sharply higher this morning with five of the front six contracts marking gains in excess of $1.00.

  • Lean hog futures gapped higher on the opening and have held their gains.
  • A rise in the pork cutout value yesterday afternoon prompted the stronger opening.
  • However, the pork cutout slipped 24 cents in morning trading but movement is a robust 263.43 load.
  • The declines in the wholesale beef prices has traders expecting pork demand will rise as a result of consumer resistance to record-high beef prices.
  • Hog movement continues to be disrupted by ongoing winter storms, which is supportive for cash prices. However, some plants may also reduce kill hours.
  • Average hog weights in Iowa and southern Minnesota declined 1.3 lbs. the week ended Feb. 1. This is still well above year-ago levels, however. Head counts are up over both week- and year-ago.
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