Market Snapshot, Noon CT (VIP) -- January 15, 2013

January 15, 2013 05:59 AM
 

Corn futures have mildly extended earlier gains to trade mostly 3 to 9 cents higher.

  • Corn futures continue to benefit from short-covering after USDA on Friday updated its balance sheet to show smaller-than-anticipated carryover supplies. This was due in part to strong domestic feed demand.
  • Spillover from wheat is also giving corn futures a boost.
  • But until export demand improves, buying interest will likely remain limited to short-covering.
  • Gulf basis action this morning does not signal export news is on the horizon. Prices softened a penny for February and May delivery.
  • Light support also stems from increasing concern about a shift to heat and dryness in Argentina after a very soggy start to the growing season.
  • The market continues to await the result of Taiwan's tender for 60,000 MT of optional origin corn for March delivery. Asian countries have recently stepped up corn buys, which signals they anticipate higher prices ahead, but South America has been the recipient of most of this business.

 

Soybean futures have softened to favor the downside in narrowly mixed trade.

  • Traders are taking advantage of the recent soybean rally and dollar strength by booking profits.
  • Today's action signals the bean market needs a daily dose of fresh demand news to sustain buying interest.
  • A 5-cent slide in Gulf basis for February delivery at midday and steady levels for other months signals this may be lacking over the near-term.
  • But an overall strong demand and tight supply situation, as evidenced by recent strong daily sales and soy crush numbers, will continue to limit downside risk for beans.
  • This has kept basis levels at historically high levels around the country.
  • Dryness and heat in Argentina are limiting pressure, though this is not yet especially worrisome and the South American beans crop is still expected to be record-large.

 

Wheat futures are the upside leader today. Chicago wheat has surged 20-plus cents higher in most contracts and Kansas City and Minneapolis wheat are close behind with gains in the upper teens.

  • Wheat futures continue to benefit from ideas global and domestic wheat supplies are tighter than earlier thought as well as expectations this will give U.S. wheat a boost on the global export market.
  • Last Friday's USDA reports as well as news earlier this week that up to 25% of Russia's wheat crop may have been damaged by winterkill are supporting these ideas.
  • Also, the market today learned that the State Statistics Service pegs Ukraine's wheat production at 15.76 MMT, which is a 19.4% decline from year-ago.
  • In addition, the U.S. HRW wheat crop entered dormancy in tough shape and ongoing drought and recent frigid temps could have caused further deterioration to yield potential.

 

Live cattle futures have improved to favor the upside in narrowly mixed trade. Feeder cattle futures continue to see slight to moderate losses.

  • Buying interest in live cattle futures is limited as futures are already at at a $4-plus premium to last week's cash cattle prices and boxed beef market performance has thus far not given the market reason to expect firmer cash trade this week.
  • This is especially true considering that packers are cutting in the red.
  • This morning, Choice cuts slid 9 cents and Select values fell 34 cents; movement did, however, improve to 108 loads.
  • Steady showlists compared with week-ago provide little direction.
  • But downside risk remains limited by expectations for supplies to tighten going forward. This has kept February futures above psychological support at $130.00.
  • Strength in the corn market and the U.S. dollar index continue to weigh on feeder cattle.

 

Lean hog futures have at times seen choppy trade today, but ahead of this afternoon futures are posting slight losses.

  • Lean hog futures are seeing a quiet day of trade amid a lack of bullish or bearish news.
  • Cash hog bids are mostly steady today, despite negative packer margins. Supplies and demand are generally thought to be evenly matched.
  • Also, pork demand is expected to improve as pork is inexpensive relative to beef.
  • This morning's pork movement has already topped yesterday's disappointing total. Already, 39.5 loads have changed hands.
  • Also limiting buying and selling interest, the front-month futures contract is at just a slight premium to the cash hog index.
     
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