Market Snapshot, Noon CT (VIP) -- January 29, 2013

January 29, 2013 05:58 AM
 

Corn futures remain mixed amid bull spreading, with nearbys marginally higher and deferreds slightly lower.

  • With little fresh news to digest, corn is vulnerable to spillover from neighboring pits.
  • But weakness in the U.S. dollar index is keeping selling in check.
  • Also helping to limit pressure are signs export demand may be improving, but this morning, Gulf basis is steady.
  • Traders are also keeping a close eye on the Argentine crop situation. Hot and dry weather this week is stressing pollinating corn, but rains are expected this weekend.
  • Gains are also being limited by expectations for large corn plantings in 2013 along with improvement in Corn Belt soil moisture deficits, though much more is needed.

 

Soybean futures have weakened to trade mixed. Soymeal and soyoil have also softened to choppy trade.

  • Soybean futures have softened on a reminder of the potential for a record South American soybean crop. Brazilian analyst Safras e Mercado has raised its estimate of Brazil's soybean crop slightly to a record 84.69 MMT.
  • Meanwhile, Germany-based Oil World says transportation delays may shirt business back to the U.S. for the next one to three months, which would further tighten U.S. stocks.
  • Traders continue to keep an eye on the weather situation in South America, as hot and dry weather is raising concern about the crop in Argentina and southern Brazil.
  • A weaker U.S. dollar index is limiting selling in the commodity market, as well.

 

Wheat futures remain 1 to 4 cents higher at all three exchanges amid short-covering.

  • Support is largely coming from a reminder that supplies are tight in the Black Sea region. Today, Russia's deputy ag minister said the country will soon officially cut its 2012-13 grain export forecast from 15.5 MMT to 14 MMT. The official also said the country plans to sell another 3 MMT of intervention stocks onto the domestic market.
  • Plus, there is little rain in the forecast for the Central and Southern Plains and conditions of the crop in the HRW Wheat Belt deteriorated in January.
  • Outside markets are also supportive of commodity buying this morning thanks to strong housing data. Crude oil futures have extended early gains.

 

Live and feeder cattle futures are posting slight losses this morning amid profit-taking.

  • Following yesterday's sharp gains, live and feeder cattle futures are seeing profit-taking, although losses are light given the bullish fundamental situation.
  • The boxed beef market, however, is adding to the weaker tone. Choice beef values are 58 cents lower and Select cuts are down 43 cents this morning, but movement is strong at 116 loads.
  • Traders are still waiting on packers to bid for cattle, but they fully expect a near-term cash low has been struck due to tightening supplies.
  • But futures are already at a steep premium to last week's $122 to $124 trade, so near-term upside potential could be limited.

 

Lean hog futures are mixed, with February slightly lower and April firmer.

  • Slight weakness in the cattle pit is limiting buying in the hog pit, although hog futures are favoring a firmer tone given tightened market-ready supplies.
  • But the cash hog market is mostly steady today after trading as much as $2 higher yesterday due to improved transportation of animals.
  • Pressure is also being limited by yesterday's 52-cent gain in the pork cutout value, though movement slowed notably to 34.13 loads.
  • While this improved margins slightly, packers are still cutting in the red, limiting their willingness to raise bids.
  • Pressure is also being limited by the discount the front-month contract holds to the cash hog index.
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