Market Snapshot, Noon CT (VIP) -- January 18, 2013

January 18, 2013 05:55 AM
 

Corn futures continue to see gains around 1 to 4 cents at midday.

  • Traders are covering short positions ahead of the weekend as building dryness in Argentina makes traders unwilling to be short heading into Martin Luther King Jr. Day, as the markets are closed on Monday.
  • But that is the extent of buying interest as export demand remains lackluster. Emphasizing this, Gulf basis slid 4 cents for immediate delivery at midday.
  • Also limiting buying interest, Informa Economics reportedly raised its corn planted acreage projection slightly to 99.303 million.
  • Strength in the U.S. dollar index as consumer sentiment fell to a one-year low for January is also keeping gains in check.

 

Soybean futures have improved to trade just slightly lower in March and May futures, while deferred months are slightly higher.

  • Nearby soybean futures trimmed losses on news Informa Economics reportedly lowered its soybean planted acreage projection to 78.777 million from 78.96 million acres in December.
  • But dollar strength is encouraging some to book some profits ahead of the weekend.
  • While the forecast for Argentina remains unfavorably dry and hot, traders will wait until next week to build more premium into prices if the weather pattern remains unchanged.
  • Also helping to limit losses is news China's economy improved in the fourth quarter, sparking hope such growth and with it strong soy demand will continue.
  • Further, China National Grain and Oils Information Center says Chinese purchases from the U.S. and South America last week picked up thanks to now-positive crush margins. Last week's total of 1.8 MMT to 1.98 MMT was well above the "normal" 1.2 MMT.
  • Also, a 2 cent rise in Gulf basis for immediate delivery at midday signals more demand news may be on the horizon. Gulf basis was steady to a penny lower for other months.

 

Wheat futures at all three exchanges have improved to trade mostly 3 to 4 cents higher. Nearby Chicago wheat are 5 to 6 cents higher.

  • Wheat is seeing a lift on spillover from slight strength in the corn market, although strength in the dollar index is limiting buying.
  • Otherwise, focus is on traders even positions positions ahead of the extended holiday weekend, as the markets are closed on Monday for Martin Luther King Jr. Day.
  • Dryness in winter wheat country remains concerning. Both the near-term and long-term forecasts call for little chance of relief and for drought to continue its stronghold.
  • Traders are unlikely to actively add long positions in wheat futures until it sees signs U.S. wheat is competitive on the global export market.

 

Live cattle futures remain choppy with nearbys slightly to moderately lower and deferred months steady to slightly higher. Feeder cattle futures are similarly split.

  • Traders continue to engage in some followthrough selling in nearby contracts as Cargill's announcement yesterday that it will idle a Texas beef processing plant raised concerns about an increase in near-term supplies.
  • Such concerns are likely overdone, however, as supplies are tight and the plant in question was already running at reduced capacity. Nevertheless, traders remain unwilling to add risk ahead of the weekend.
  • Deferred months continue to benefit from expectations supplies will continue to tighten through 2013, possibly over an even longer timeline than expected if drought conditions do not improve.
  • Pressure also stems from some additional light sales in Kansas and Nebraska Thursday at $123 to $123.50, which is down from the bulk of trade at $125 Wednesday and below February futures.
  • Adding to the negative tone, Choice boxed beef fell $1.18 and Select values fell $1.84 this morning. Movement was strong at 121 loads, however.

 

Lean hog futures have improved to narrowly mixed trade.

  • Some light short-covering has picked up in the lean hog market as traders even positions ahead of the extended holiday weekend.
  • Steady to firmer cash hog bids again this morning is also encouraging of this.
  • But as packers are cutting well in the red, they will likely be highly reluctant to raise bids next week unless the pork cutout value improved notably.
  • Yesterday, the pork cutout value fell 37 cents but movement was solid.
  • Expectations for supplies to tighten in the weeks ahead should keep a floor under the cash hog market and thus futures, however.
  • February lean hogs are trading in line with the cash hog index, limiting both buying and selling interest.
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