Market Snapshot, Noon CT (VIP) -- January 24, 2014

January 24, 2014 05:57 AM
 

Corn futures improved ahead of midday to trade steady to a penny higher.

  • Corn futures opened softer on a continuation of overnight trade, but have firmed due to indications of strong demand.
  • Weekly corn export sales of 693,000 MT for 2013-14 topped expectations, with Egypt (a value buyer) the lead purchaser.
  • USDA also announced daily corn sales of 150,000 MT to Spain, 120,000 MT to Egypt and 100,000 MT sold to Japan -- all for 2013-14.
  • But limiting buying is a reminder of Chinese trade issues. Grain industry groups have asked Syngenta to suspend commercial use of its Viptera corn seed in the U.S. until China grants regulatory approval of the variety keeps the country's cancellations of U.S. corn buys in focus.
  • Also this morning, China announced plans to expand its grain production by 50 MMT by 2020 through increasing acreage and seed technology in an effort to become self-sufficient.
  • March corn is still working on slight weekly gains.

 

Soybean futures have also trimmed losses to trade mixed.

  • Continued strong demand and no signs of large Chinese cancellations are helping soybeans to move off session lows at midday.
  • But traders still have improved South American weather forecasts on their minds and are also digesting news about the sharp devaluation of the Argentine peso.
  • Also this morning, a private consultancy in Brazil raised its peg of the country's soybean crop to 91.8 MMT, which is above Conab's latest forecast.
  • This morning's weekly soybean export sales data showed 703,400 MT of old-crop beans were purchased, with 969,800 MT of new-crop beans also sold. The overall tally topped expectations by a wide margin. China was once again the lead buyer.
  • Additionally, USDA announced a daily soybean sale of 126,000 MT to China for 2014-15 ahead of the open of daytime trade.
  • March soybean futures came within a penny of the January low, which spurred fresh buying and a price recovery back to the $12.75 area.

 

Wheat futures remain under pressure, with SRW down mostly 5 to 6 cents, HRW down 3 to 4 cents and HRS 2 to 4 cents lower.

  • While corn and soybean futures have moved off session lows, wheat futures continue to hover near session lows.
  • Traders were disappointed by today's Weekly Export Sales Report that showed wheat sales of 421,400 MT for 2013-14 and a net sales reduction of 8,000 MT for 2014-15. While the tally met expectations, a pickup in sales is needed to stabilize futures.
  • There are signs prices are attracting more demand, however. Overnight sales activity showed a pickup in sales, but traders say that must continue to prove U.S. wheat is a value buy. Also, Gulf SRW wheat basis jumped 5 cents for March, April and May delivery at midday.
  • Traders are paying attention to the cold spell across the country's winter wheat areas, but this remains on the backburner as the crop went into dormancy in much better shape than last year.
  • March SRW wheat futures have remained within the boundaries of yesterday's trading range, but continue to hover above contract-low support.

 

Live and feeder cattle futures have slightly extended losses in the nearby contracts, with futures trading slightly to moderately lower at midday.

  • Pressure on futures comes from ideas the boxed beef market has topped, but pressure is somewhat being limited by expectations for a bullish Cattle on Feed Report.
  • Traders look for the report to reflect a tightening feedlot situation. According to pre-report average trade guesses, the report is expected to show On Feed at 94.0%, Placements at 98.1% and Marketings at 102.2% of year-ago levels.
  • For the first time this month, Choice beef values are working on back-to-back days of price losses, with values down 28 cents at midday. But Select values have improved 29 cents to narrow the discount it holds to Choice to just $1.05.
  • Traders still have this week's record $147 to $150 cash cattle trade on their minds, but suspect packers will not continually raise bids as they must protect their margins.
  • Price action in January feeder futures is being limited as the contract is trading in line with the cash index.

 

Lean hog futures remain stronger at midday, with nearbys leading gains.

  • Lean hog futures gapped higher on the open and most contracts have slightly extended early gains.
  • Futures are seeing a boost from transportation disruptions this week that have raised packer demand for hogs.
  • The cash hog market is mostly steady today, but some locations have raised bids as they work to secure a larger Saturday kill to make up for this week's holiday and weather interrupted kill schedule.
  • Pork cutout values, however, slipped $1.02 this morning due to weakness in loins, ribs, hams and belly prices. This will tighten packer profit margins, although they remain in the black.
  • Pork export sales for the week ended Jan. 16 of 14,700 MT represent a strong gain compared to last week's 9,900 MT in sales. Exports were also solid at 12,600 MT.
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