Market Snapshot, Noon CT (VIP) -- January 23, 2013

January 23, 2013 05:56 AM
 

Corn futures softened just ahead of midday, with nearbys 3 cents lower and deferreds marginally to 1 cent lower.

  • A lack of fresh news has resulted in choppy action in the corn market today. Spillover from soybeans have caused corn to soften ahead of midday.
  • Selling interest is being limited by ongoing concerns about tight U.S. supplies, which makes dryness concerns in Argentina and southern Brazil even more important.
  • But buying interest is also limited as export demand has been disappointing for many months and South American crop concerns are not yet overly worrisome, especially considering that there are rain chances in the five-day forecast for both Brazil and Argentina.
  • Outside markets are also a mixed bag as the dollar is higher and crude oil futures are lower, while the Dow Jones Industrial Average is firmer today.

 

Soybean futures have seen two-sided trade today, but futures softened notably ahead of midday to trade double-digit lower through the August contract, with deferred months seeing lighter losses.

  • Fresh news is lacking for soybeans today, which means traders have oscillated between light profit-taking and light short-covering.
  • Profit-taking picked up ahead of midday due to a wetter 6-10 day forecast for central Argentina. This, in turn, triggered some sell stops.
  • But downside risk remains limited by ongoing strong soy demand. Gulf basis firmed for immediate delivery at midday, which could signal more daily sales announcements are ahead.

 

Wheat futures softened just ahead of midday to post losses around 3 to 4 cents in Chicago while Kansas City and Minneapolis are seeing slightly lighter losses.

  • Spillover from soybeans caused profit-taking in the wheat market to pick up just ahead of midday. A now-firmer U.S. dollar index is also encouraging of this.
  • A wetter forecast for the U.S. Southern Plains adds light pressure.
  • Nevertheless, selling interest remains limited by widespread drought on the U.S. Plains that will take a number of widespread rain events to relieve.
  • However, upside potential will also remain limited until demand for U.S. wheat improves on the global export market. Despite tightening global supplies, this has been slow to occur.

 

Live cattle futures have improved to post slight losses in most contracts. Feeder cattle futures are split with nearbys under pressure and deferred months slightly higher.

  • Yesterday's heavier than expected beef in cold storage numbers for the end of December continue to weigh on the cattle market, as the total was a 5.3% increase over the month prior, raising questions about demand.
  • Countering this is another day of strong beef movement. A 68-cent decline in Choice boxed beef values and a 73-cent slide in Select cuts resulted in 192 loads changing hands this morning, which is above recent daily totals.
  • Signs of improving beef demand and tighter showlist estimates could encourage firmer cash trade this week. The front month contract is just slightly above the upper end of last week's cash price range.
  • Also limiting pressure are expectations for Friday's Cattle on Feed Report to reflect tightening supplies, with Placements above year-ago and other categories below year-ago.

 

Lean hog futures have extended early losses to trade moderately lower in all but the front-month, which is just slightly lower.

  • Yesterday's Cold Storage Report continues to weigh on lean hog futures as it showed heavier-than-anticipated frozen pork stocks as of Dec. 31 that were well above year-ago.
  • Also, cash hog bids are mostly steady today as packers work to improve negative cutting margins.
  • Yesterday's $1.23 rise in the pork cutout value and strong movement did help improve these profit margins, but more is needed to pull them into the black.
  • The dollar has moved into positive territory, adding light pressure.
  • The cash hog index was mostly recently projected at $87.00, which is at around a $1.50 premium to the February contract and in line with April lean hogs.

 

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