Market Snapshot, Noon CT (VIP) -- January 31, 2013

January 31, 2013 06:01 AM
 

Corn futures have improved to trade steady to slightly higher through the July contract, while deferred months are mostly slightly lower.

  • Corn futures are seeing some month-end positioning today.
  • While export demand has long been lackluster, recent Gulf basis improvement for corn has sparked some hope long-absent importers are booking some near-term needs.
  • This was not reflected by this morning's weekly export sales of 186,800 MT for 2012-13 and 66,500 MT for 2013-14, however. While these sales met expectations, the tally was unimpressive.
  • Also encouraging light profit-taking is a wetter 11- to 15-day forecast for Argentina. Plus, the market is hesitant to add risk as there are chances for light rain this weekend.

 

Soybean futures continue to post losses around 7 to 13 cents at midday.

  • Soybean traders are booking profits to wrap up the month as futures have posted an impressive recovery since mid-month.
  • A wetter forecast for Argentina this weekend and through mid-February is also encouraging to this end.
  • But profit-taking will likely remain the extent of selling interest over the near-term as China will continue to gobble up U.S. bean supplies until South American supplies come available -- likely in the next several weeks.
  • This morning's weekly export sales report of 386,000 MT for 2012-13 and 867,000 MT for 2013-14 came in well above expectations, featuring China as the main buyer.
  • Also today, USDA announced another daily new-crop bean sale to China for 220,000 MT.

 

Minneapolis wheat futures have improved to mixed trade. Chicago wheat, on the other hand, has softened to trade mostly 6 cents lower. Kansas City is still 1 to 4 cents lower.

  • Spillover from soybeans continues to weigh on the wheat market.
  • Also, weekly exports sales of 293,600 MT for 2012-13 and 94,300 MT for 2013-14 met expectations, but the unimpressive tally reminds the market that U.S. wheat is still struggling to compete on the global export market.
  • But widespread drought across the U.S. Plains continues to limit selling interest. Though with the crop still in dormancy, this is not enough to support active buying interest.
  • Ukraine's ag ministry is reportedly urging exporters to halt wheat exports and refrain from additional exports as it would violate the current agreement to suspend wheat shipments. This is also limiting selling pressure.
  • Also, Russia's deputy prime minister is expected to discuss lifting its 5% grain import duty tomorrow. Doing so would be a positive for U.S. wheat.

 

Live cattle futures continue to enjoy slight gains in most contracts, with the exception of the slightly lower front-month contract. Feeder cattle futures are slightly to moderately higher.

  • Traders are favoring the upside as they ready position for what is expected to be a friendly semiannual Cattle Inventory Report. It is expected to show tightening supplies and that heifer retention has not yet begun.
  • But upside potential is limited as nearby futures are at least a $3 premium to cash cattle trade in Texas and Kansas at $125 yesterday.
  • Also, the boxed beef market continued its unsuccessful search for a low this morning. Choice and Select cuts fell $1.24 and 56 cents, respectively, though the lower prices again encouraged strong movement of 156 loads.
  • Weekly boxed beef exports also fell compared to recent weeks to just 12,100 MT.
  • Feeder cattle futures are benefiting from weakness in the corn market today as well as pre-report positioning.

 

Lean hog futures are mixed with most contracts favoring the upside.

  • Cash hog bids are mostly steady today as some plants are still working to secure needs for this weekend's kill after two storms in the Midwest disrupted travels.
  • Packers have been highly reluctant to pay better than steady prices for tightening market-ready hog supplies, however, as a decline in the pork cutout value yesterday pulled cutting margins back solidly into the red.
  • The market continues to ignore news Russia's top ag watchdog confirmed the country plans to ban imports of meat and meat products from the U.S. as part of the ractopamine dispute. This includes a ban on chilled meat Feb. 4 and a frozen meat ban on Feb. 11.
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