Market Snapshot, Noon CT (VIP) -- January 25, 2013

January 25, 2013 06:07 AM
 

 

 

Corn futures have again softened to trade fractionally to 3 cents lower.

  • Corn futures have seen choppy trade today, but reminders of disappointing export demand and improved weather in South America are giving bears an edge ahead of the weekend.
  • Weekly export sales of 138,400 MT for 2012-13 and 51,200 MT for 2013-14 fell short of already low expectations this morning.
  • Early spillover support from soybeans has also faded.
  • Also leading to choppy trade, some long-range weather forecasts call for rain in Argentina and southern Brazil, though other weather models point to a drier pattern.
  • Gulf basis firmed for immediate delivery this morning and at midday. The possibility this may point to improved export demand is limiting selling interest.

 

Soybean futures are 2 to 7 cents lower in all but the front-month March contract, which is firmer.

  • Traders are uncertain about South American weather going forward, and thus are opting to book some light profits ahead of the weekend. Rains or not, the region is still expected to produce a record-large bean crop.
  • But profit-taking is the extent of selling interest as today's strong weekly export sales tallies of 383,300 MT for 2012-13 and 595,000 MT for 2013-14 came in above expectations.
  • Soybean export sales remain well above the pace needed to reach USDA's 2012-13 export projection.
  • Plus, more demand news may be on the horizon. Gulf basis firmed this morning and at midday for near-term delivery.

 

Wheat futures continue to enjoy gains around 3 to 6 cents in Chicago and Kansas City, while Minneapolis wheat is 6 to 9 cents higher.

  • Weekly export sales of 572,500 MT for 2012-13 and 75,000 MT for 2013-14 topped expectations and improved over last week's solid tally. This sparks hopes export demand for U.S. wheat is finally improving.
  • While there is rain in the forecast for the Central and Southern Plains this weekend, the 6- to 10-day forecast calls for below-normal precip. This is especially concerning when one considers the extensive drought in winter wheat country.
  • Outside markets are also friendly with the dollar under pressure and the stock market enjoying gains.

 

Live cattle futures continue to enjoy moderate gains in nearby contracts, while deferred months are mixed. Feeder cattle futures softened to trade just slightly higher.

  • Cattle futures continue to benefit from short-covering ahead of this afternoon's Cattle on Feed Report, which is expected to show On Feed at 95.6% of year-ago, Marketings at 93.2% of last year and Placements of 104.1% of last year's levels.
  • The market is also benefiting from steady cash trade in Nebraska at $124 yesterday, which was an improvement from lower trade across most regions at $122 this week.
  • Traders appear comfortable leaving futures at a $4-plus premium to this week's cash prices considering tightening supply prospects.
  • The boxed beef market slid another 1 (Select) to 41 (Choice) cents this morning and movement slowed to 94 loads. This signals the market is still searching for a low.
  • Feeder cattle futures reined in early gains as some moved to the sidelines ahead of the weekend and this afternoon's herd update.

 

Lean hog futures remain slightly lower at midday.

  • Softer pork prices and profit-taking ahead of the weekend are putting light pressure on the lean hog market today.
  • The cash hog market is mostly steady today, in contrast to recent steady to higher bids.
  • The pork cutout value slid yesterday, pulling packer profit margins deeper into the red. This will continue to limit packers' willingness to raise bids, though supplies are tightening.
  • Pressure on February lean hogs is also being limited by the roughly $1.40 discount the contract holds to the CME Cash Hog Index, which is projected at $88.28.
  • Friendly outside markets are also limiting pressure on lean hogs as the dollar is under pressure and the stock market is firmer, thanks to solid jobs data and earnings reports today.

 

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