Market Snapshot, Noon CT (VIP) -- January 30, 2014

January 30, 2014 06:10 AM
 

Corn futures continue to trade 3 to 5 cents higher, with old-crop leading gains.

  • Corn futures are higher on positive export news.
  • The gains are coming despite a stronger U.S. dollar index, which adds strength to the move.
  • March futures are trading at their highest level since Jan. 13.
  • Triggering the upturn is the strong weekly corn export sales report of 1.838 MMT for 2013-14 and 105,700 MT for 2014-15. The total was more than 2.5 times the top end of expectations. Exports of just over 1 MMT were also impressive and up 38% from the prior four-week average.
  • Adding to the strong demand picture, USDA announced a 127,000 MT corn sale to unknown destinations for 2013-14.
  • Gulf corn basis is unchanged for the front months and for May delivery, up 1 cent for April delivery and up 2 cents for June delivery.

 

Soybean futures have continued to gain strength and are 2 to 12 cents higher with old-crop futures leading gains.

  • Strong export sales and technical buying off support zones has soybean futures higher today, despite a stronger U.S. dollar index.
  • This morning's Weekly Export Sales Report showed purchases of 494,800 MT for 2013-14 and 371,000 MT for 2014-15, which met expectations. While this was a bit lighter than recent strong tallies, weekly exports impressed at nearly 2.115 MMT -- a 39% increase from week-ago.
  • Traders' concerns over potential order cancellations from China were increased as this morning's export sales report included a 610,300 MT cancellation by unknown destinations. That prompted initial weakness in morning trading.
  • But the technical buying triggered as prices tested support zones and failed to uncover additional sell stops has pushed prices higher. March futures are working on an outside day.
  • Adding to concerns about slower Chinese demand is yet another sign of contraction in China's manufacturing sector, as well as the ongoing spread of the H7N9 bird flu.
  • Gulf soybean basis is steady with the exception of a 2-cent rise for March delivery.

 

SRW wheat futures are 1 cent higher in the nearby March contract and steady to fractionally lower in deferred contracts. HRW wheat futures are 1 to 2 cents higher. HRS March wheat futures are 2 cents higher versus deferred contracts, which are 3 to 4 cents lower.

  • Corrective short-covering has some winter wheat contracts higher. Additionally, some traders are evening positions ahead of the forecast for winter wheat areas to experience another blast of cold temps.
  • Futures are also seeing light support from this morning's weekly export sales data that showed sales of 794,900 MT for 2013-14 and 2,000 MT for 2014-15. This was well above expectations and signals U.S. wheat is a value buy.
  • But the HRS market is seeing pressure from the sharp gains in the U.S. dollar index and the obvious downward posture of the wheat markets.
  • Limiting gains is today's International Grains Council report in which it increased its total world grain production outlook to 1.964 MMT, which would be a 10% increase from year-ago.
  • Gulf SRW wheat basis is 2 cents higher for February delivery and a penny higher for June delivery. Other delivery periods are steady.

 

Live cattle futures are choppy, ranging from 35 cents lower to 27 1/2 cents higher with the front-month February contract unchanged. Feeder cattle futures are slightly weaker.

  • Declines in boxed beef prices and expectations for lower cash cattle trade this week has cattle futures leaning to the defensive side as the trade waits on the start of cash trade.
  • Showlists are reportedly higher in most locations this week, but the continuing cold weather and winter precip is stressing animals, limiting weight gains.
  • The decline in beef prices has cut into packer profit-margins, but they are still in the black.
  • Cash cattle traded in the $147 to $150 range last week, with the Southern Plains trading near the lower end of that range.
  • But February futures are already $5 below that $147 price, which is limiting selling interest.
  • This morning's wholesale beef trade is mixed with Choice boxed beef down 4 cents but Select beef up 79 cents. Movement is a light 66 loads.
  • Traders look for Friday's Cattle Inventory Report to show all cattle and calves at 98.6% of year-ago and the annual calf crop at 97.9% of year-ago.
  • Strength in the corn market along with the a sharply higher U.S. dollar index are pressuring feeder cattle futures.

 

Lean hog futures are generally weaker with the exception of some far deferred contracts.

  • Light profit-taking following yesterday's strong gains is the dominant theme in today's trading.
  • Strength in the U.S. dollar index is adding to the light selling pressure.
  • The pork product market is weaker this morning, followings gains yesterday. The pork cutout value is off 53 cents and movement is a light 111.64 loads. Today's movement is disappointing following yesterday's solid movement of 405.78 loads on stronger prices.
  • However, traders continue to expect retailers will feature pork in February as the record boxed beef prices move to retail meat counters.
  • Cash hog prices are higher today due to transportation issues due to frigid temps and poor road conditions earlier this week. Snow is again sweeping across the Midwest and temperatures are expected to plunge once again, suggesting further transportation issues going forward.
  • February lean hogs futures continue to trade at a steep premium to the cash hog index, which is limiting buying interest.
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