Market Snapshot, Noon CT (VIP) -- January 14, 2014

January 14, 2014 05:56 AM
 

Corn futures are 2 to 4 cents lower amid profit-taking.

  • Following two days of gains, corn futures are seeing some profit-taking on ideas the bullish reaction may have been overdone.
  • Sharp price gains on Friday came after USDA trimmed the size of the 2013 corn crop more than expected and revealed record usage during the first quarter. While carryover declined in last week's report, stocks remain plentiful.
  • While China's move to renew GMO registrations for several crops is a positive step, there is still no timeline as to approval of MIR 162 (Syngenta's Agrisure Viptera). This is the variety that has spurred the country's rejections of U.S. shipments.
  • Otherwise, there's little fresh news for the market to digest today, which is adding to the negative tone.
  • After starting the day steady to 1 cent higher, Gulf basis is steady to 1 cent lower at midday.

 

Soybean futures are favoring the upside at midday, with March and May contracts leading gains.

  • Price action has been choppy in the soybean pit so far today, with the January through August contracts now 5 to 14 cents higher. Deferred futures are mostly around a penny higher, although September is weaker.
  • The ongoing hot and dry forecast for Argentina is largely behind the gains, as traders believe the size of the South American crop has "topped" and private estimates will stabilize or decline.
  • Weather is more favorable in Brazil, with scattered showers in the forecast this week. But a dry pocket in central Brazil is raising concerns about yield potential there.
  • Traders continue to monitor the Chinese bird flu situation. Authorities have confirmed an outbreak of H5N1 bird flu in a chicken flock in the central province of Hubei and have quarantined the area after culling 46,800 chickens. So far, the country has avoided a widespread outbreak.
  • January beans are working on an upside day of trade on the daily chart and are pivoting around $13.30.

 

After a weaker start, wheat futures have firmed, with HRW leading gains. SRW and HRS wheat futures are 1 to 3 cents higher, with HRW up 4 to 8 cents at midday.

  • HRW wheat is being supported by forecasts for dry conditions the next 5 to 10 days, although no damaging cold is expected during the period.
  • Traders are noting a weekly condition update for Texas that showed 38% of the state's winter wheat crop is rated "poor" to "very poor," compared to 28% as of Nov. 24.
  • Light pressure in early trade stemmed from news Russia has exported 16.384 MMT of grain so far this marketing year -- above the entire 2012-13 marketing year total. Also, Ukraine's ag minister raised the country's 2013-14 grain export forecast by 1 MMT to 33 MMT.
  • In order to build on today's gains, wheat needs a constant dose of export news to signal prices are once again competitive.

 

Live cattle futures have strengthened, with nearbys leading gains. Feeder futures are trading slightly to moderately higher.

  • Live and feeder cattle futures have extended early gains amid tight supplies and strength in the beef market.
  • Boxed beef values continue to surge, with Choice up $3.03 this morning to a record $219.97 per hundredweight. Select values hold a narrow $1.82 discount to Choice to reflect a tight supply situation.
  • Strength in the beef market has helped to trim packers' losses sharply this week. But cash trade isn't expected to get underway until later in the week as cash bids are lacking.
  • The February live cattle contract are at around a $1.50 discount to the low end of last week's $139 to $140 cash cattle trade.
  • This week's showlist is down substantially from last week, which gives feedlots more bargaining power.
  • Strength in live cattle and weakness in the corn market is supporting feeder futures.

 

Lean hog futures are mixed, but nearby futures have extended early gains slightly.

  • Lean hog futures continue to trade mix, but are favoring a firmer tone on spillover from live cattle.
  • Traders are hesitant to extend gains as the February contract holds around a $5 premium to the cash index.
  • Meanwhile, pork cutout values are up $1.39 this morning, but only 184.26 loads of pork changed hands this morning.
  • The cash hog market is mostly steady, with packers believing they will have no difficulty securing needed supplies after the weather improves across the Corn Belt.
  • From a technical perspective, February lean hog futures remain within the boundaries of this month's trading range to suggest the market is still searching for a low.
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