Market Snapshot, Noon CT (VIP) -- January 24, 2013

January 24, 2013 06:01 AM
 

Corn futures have improved slightly to trade fractionally to 4 cents lower.

  • Corn futures have moved off their lows thanks to some light short-covering, but a lack of fresh news means buying interest remains very limited.
  • Limited rain chances for Argentina and Brazil have been enough to keep bears in control of the corn market.
  • In addition, traders don't expect tomorrow's export sales report to reflect any notable improvement in corn export demand.
  • U.S. ethanol production rose a marginal 1% to 792,000 barrels per day last week compared with the previous week's tally, which was the lowest since the Energy Information Administration began releasing this data in 2010.
  • But downside risk is limited thanks to ongoing concern about tight U.S. supplies.
  • Outside markets are a mixed bag. The U.S. dollar index is firmer and the commodity index is under pressure, but this is countered by gains in the stock market and crude oil futures.

 

Soybean futures have moved off their early lows with March through August futures 15 to 16 cents lower while deferred months are 4 to 9 cents lower.

  • News China bought 510,000 MT of soybeans and an unknown destination bought 113,000 MT of soybeans -- both for 2013-14 -- is limiting selling interest in soybeans to profit-taking.
  • Recent strong daily soybean sales to China as well as signs the country's economy is improving will continue to limit beans' downside risk.
  • But the market's upside is also limited by expectations a record-large South American crop will soon hit the export market, slowing strong Chinese demand.
  • Plus, dryness concerns have eased for the time being in southern Brazil and central Argentina thanks to a forecast for improved rain chances and milder temps.
  • Light pressure also stems from a 2-cent slide in Gulf basis for near-term delivery this morning and at midday.

 

Chicago wheat continues to see losses around 9 to 11 cents, while Kansas City is mostly 12 cents lower. Minneapolis is roughly 4 to 8 cents lower.

  • Light rain in the forecast for the Central and Southern Plains this weekend is putting a damper on any buying interest in the wheat market today.
  • Losses in the soy complex and corn market are also encouraging profit-taking in wheat.
  • While much more than light rain is needed to relieve major drought across the U.S. Wheat Belt, it is hard to get traders enthused about the crop without weekly condition updates and with the crop in dormancy.
  • News Russia plans to sell around 3 MMT of grain intervention stocks by June 30 to ease domestic prices, leaving just 3.33 MMT of grain in government storage, should limit the market's downside.

 

Live cattle futures continue to enjoy slight gains in most contracts, with the exception of the April contract that is slightly lower. Feeder cattle futures remain moderately higher.

  • Traders continue to focus on correcting the cattle market's recent oversold condition as they expect tomorrow's Cattle on Feed Report will reflect tightening supplies.
  • Also, this week's surge in boxed beef movement has traders watching for the product market to put in a low, though prices continued to slide this morning. Choice cuts fell $1.63 and Select cuts declined 60 cents this morning. Movement was solid at 124 loads.
  • Therefore, the market appears unconcerned with bringing futures in line with light cash cattle trade at lower prices yesterday at mostly at $122 and talk of additional sales at this price in Kansas today.
  • Feeder cattle futures are benefiting from ideas the downside has been overdone this week as well as from softer corn prices today.

 

Lean hog futures have extended early gains to trade slightly higher in nearby contracts and slightly to moderately higher in other months.

  • Lean hog futures are benefiting from stronger-than-expected cash hog prices today. Cash hog bids are steady to as much as $2 higher today, despite negative margins.
  • Those packers who are not bought ahead are finding that market-ready hogs are not readily available.
  • This can be attributed to seasonally tightening supplies, lighter hog weights and producers' unwillingness to transport hogs in frigid temps.
  • Also supportive is data from new USDA pork price reports that show carcass values are about $5.50 per head higher than previous reports had indicated.
  • Gains in the pork cutout value yesterday are adding light support, though movement was lackluster.
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