Market Snapshot, Noon CT (VIP) -- January 16, 2014

January 16, 2014 06:11 AM
 

Corn futures have seen some mixed trade ahead of midday, but most contracts are currently fractionally to a penny higher.

  • Futures opened firmer on a better-than-expected export sales number but have pared those early gains on disappointment over an order cancellation.
  • Weekly corn export sales of 821,000 MT for 2013-14 topped expectations by a wide margin and included Egypt, which is traditionally a value buyer, as the top buyer.
  • Tempering enthusiasm is USDA's announcement an unknown buyer canceled an order for 126,000 MT of U.S. corn for 2013-14. Traders suspect this is China, given the country's recent rejections of corn and DDGs due to the presence of unapproved GMO material.
  • News Strategies Grains edged its 2014-15 EU corn crop forecast up by 100,000 MT to 64.8 MMT is also seen as a negative.
  • Gulf corn basis is steady in midday trading.

 

Soybean futures have trimmed early gains and are 1 to 5 cents higher.

  • Soybean futures have backed off from early gains on profit-taking after March futures probed resistance at $13.30.
  • News of strong exports lifted futures initially.
  • USDA reported weekly soybean export sales of 701,500 MT for 2013-14 and 525,300 MT for 2014-15, which topped expectations by a wide margin.
  • In addition, USDA announced daily sales to China for 60,000 MT of U.S. beans for 2013-14 and 405,500 MT for 2014-15 delivery.
  • Initial support also came from reports China's Ministry of Commerce has nearly doubled its forecast for January soybean imports to 4.61 MMT based on the strong pace the first half of the month.
  • Gulf soybean basis is unchanged at midday after 10-cent surge in Gulf basis for immediate delivery in early trading. That has traders looking for more demand news to surface soon.

 

SRW wheat futures have firmed to trade 2 to 3 cents higher, while HRW and HRS wheat are 2 to 6 cents higher.

  • Futures gained support from news Egypt's most recent wheat buy included 60,000 MT of U.S. SRW wheat. That country is traditionally a value buyer so this purchase has some traders thinking U.S. wheat prices may be finding a value level.
  • USDA's Weekly Export Sales Report came in as expected with sales of 319,900 MT for 2013-14 and 82,000 MT for 2014-15. However, exports of 586,800 MT were up 41% from last week and 53% from the four-week average.
  • News India's government may soon raise the amount of wheat it authorizes for exports due to a record-large crop and ample stockpiles is tempering gains.
  • Countering this, however, is news Strategie Grains trimmed its forecast for the 2014 EU soft wheat crop by 300,000 MT to 137.7 MMT.
  • Traders continue to shrug of concerns about drought in the Southern and Central Plains.
  • Gulf SRW wheat basis is unchanged at midday.

 

February live cattle posted another gap-higher open and continue to trade near their daily highs. April and June futures are moderately higher while deferred contracts are choppy. Feeder cattle are fractionally higher.

  • Cattle futures are higher on the record-high cash cattle trade this week and on stronger wholesale beef prices.
  • The Texas and Kansas markets saw cash trading get underway yesterday at record-high prices of $142, $3 higher than the bulk of trade last week in the region. Nebraska has seen trade at $143 to $144. Some feedlots held out for even higher prices, however.
  • The market is gaining support from another rise in the wholesale beef market. Choice boxed beef is $2.90 higher at $227.52 per cwt. and Select is up $2.55 at $224.46 per hundredweight. Movement is a slightly moderate 79 loads.
  • The rise in wholesale cuts continues to move packer cutting margins deeper into the black, which is keeping cash bids strong. Blizzard conditions in the Northern Plains today are also limiting cattle supplies in that region.
  • However, February futures are still about $1.50 below cash prices on the Southern Plains. Deferreds are seeing some selling pressure on concerns about consumer resistance to record-high beef prices.
  • Feeder cattle futures are slightly higher on the strength in live cattle futures and weakness in corn futures.

 

Lean hog futures are slightly higher with April futures leading gains.

  • Lean hog futures are higher in spillover from live cattle futures as traders believe consumer resistance to rising beef prices will eventually stimulate demand for pork.
  • The wholesale pork market is supporting that view this morning with the pork cutout value up $1.20 and movement a solid 217.37 loads.
  • However, February futures continue to hold nearly a $7 premium to the cash index, which is limiting buying interest. April futures are higher as traders factor in the impact of the porcine epidemic diarrhea virus (PEDV).
  • Cash hogs are mostly steady with Saturday's kill projected to be down 15,000 head from week-ago.
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