Market Snapshot, Noon CT (VIP) -- January 28, 2013

January 28, 2013 05:58 AM
 

Corn futures are enjoying gains of 3 to 4 cents at midday.

  • A near-term forecast for dryness in southern Brazil and central Argentina this week is supporting the corn market this morning.
  • Plus, Gulf basis firmed this morning and at midday for near-term delivery. It also firmed late last week, which could point to improved export demand.
  • But considering what has been an extended period of disappointing demand, the market will take a prove-it attitude toward any improvement.
  • This morning, weekly corn export inspections topped expectations and came in well above last week's tally at 21.127 million bushels.
  • Tight supplies are also limiting downside risk for corn. On Friday, Poet LLC, a large U.S. ethanol producer, announced it would suspend production due to limited corn supplies.

 

Soybean futures continue to enjoy gains around 1 to 5 cents in most contracts.

  • Gulf soybean basis surged 10 cents for immediate delivery and 3 cents for February delivery at midday. This signals strong export demand for a limited supply of U.S. beans.
  • This morning USDA announced China bought 220,000 MT of soybeans for 2013-14. This adds to a stream of similar sales last week.
  • Light support also comes for heat and dryness in the forecast for southern Brazil and dryness in Argentina, though both areas may see rain later in the week.
  • Weekly soybean export inspections of 40.667 million bu. were down from last week but near the top of the pre-report range of guesses.

 

Wheat futures have improved to post fractional to 2-cent gains in Chicago and Kansas City while Minneapolis is steady to 4 cents higher.

  • Wheat continues to take its cue from other markets. Gains in the corn and soybean markets helped wheat futures to move back into positive territory.
  • Plus, weekly wheat export inspections of 22.283 million bu. topped expectations. A second consecutive week of solid exports may signal demand for U.S. wheat is improving. Gulf basis firmed 3 cents for immediate delivery at midday.
  • Also encouraging of this idea was a marked pullback in Russian grain exports since December and talk about the country lifting its grain import duty. The country had exported 13.87 MMT as of Jan. 25, 10 MMT of which were wheat stocks.
  • Countering this, however, is news favorable weather in Ukraine could increase its winter grain output 20% to 30%.

 

Live cattle futures have extended early gains to trade sharply higher with nearbys $2-plus higher. Feeder cattle futures are around $2 higher in most contracts.

  • Cattle futures continue to benefit from the rosy demand picture painted by news Japan will ease import restrictions on U.S. beef to cattle aged under 30 months (from the current 20-month age limit).
  • Plus, Friday's Cattle on Feed Report was bullish as all three categories came in below year-ago and On Feed and Placements came in below expectations.
  • Futures are well above the bulk of last week's cash cattle trade at $122 to $124, signaling traders expect tightening supplies to boost the cash market. They are still waiting on this week's showlist estimates.
  • The boxed beef market was mixed this morning, with Choice cuts down 30 cents and Select values up 40 cents. Movement was strong at 121 loads.

 

Lean hog futures continue to enjoy slight gains in most contracts at midday.

  • Lean hog futures are benefiting from strong spillover support from the cattle markets.
  • Cash hog bids are mostly steady today, with a few firmer bids. While supplies are tightening and slick Midwest roads are disrupting hog transportation today, packers are still cutting in the red, limiting their willingness to raise bids.
  • The pork cutout value improved Friday, but more improvement is needed to pull packer cutting margins into the black.
  • Light support also comes from the slight discount the February contract holds to the cash hog index. April lean hogs are at a slight premium to the index.
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