Market Snapshot, Noon CT (VIP) -- January 3, 2014

January 3, 2014 06:18 AM
 

Corn futures have improved to trade around a penny higher at midday.

  • Corn futures are benefiting from short-covering after a weaker start.
  • Informa Economics reportedly pegs the 2013 crop at 14.162 billion bu. on a national average yield of 161.6 bu. per acre. While the total production figure is lower than the firm's previous estimate of 14.223 billion bu., it is higher than USDA's November estimate of 13.989 billion bu. on a national average yield of 160.4. USDA will issue its final production estimate Jan. 10.
  • The firm also reportedly lowered its Brazilian corn production estimate by 2.75 MMT to 67.4 MMT due to reduced fertilizer and other input use by farmers.
  • A weaker U.S. dollar index provided some support initially but traders continue to focus on improving crop-growing conditions in Argentina as a negative for U.S. corn.
  • Weak export sales of 154,500 MT for 2013-14 and 20,300 MT for 2014-15 fell short of already low expectations. However, a slowdown over the holidays is typical.
  • Gulf corn basis is steady at midday suggesting export demand news may be lacking in the near term.

 

Soybean futures have turned lower with losses of 1 to 3 cents through all 2014 contracts.

  • Soybean futures turned lower on projections of a large 2013 soybean harvest by private analytical firm Informa Economics.
  • The firm reportedly boosted its production estimate to 3.329 billion bu., up marginally from 3.298 billion bu. issued previously. The firm reported increased its national average yield estimate to 44.0 bu. per acre, up from its previous estimate of 43.3 bu. per acre. USDA's yield estimate, which will be updated Jan. 10, is 3.258 billion bu. with a national average yield of 43.0 bu. per acre.
  • The firm reportedly lowered its Argentine soybean production by 2 MMT to 57.5 MMT.
  • The market opened firmer on a strong export Weekly Export Sales Report that topped expectations with total sales in excess of 1 MMT. USDA reports weekly sales of 943,400 MT for 2013-14 and 237,500 MT for 2014-15, with China as the lead buyer.
  • Gulf soybean basis is steady at midday.

 

Wheat futures are posting gains of 6 to 9 cents in SRW wheat, 7 to 10 cents in HRW wheat and 6- to 8-cent gains in HRS.

  • Wheat futures are higher on profit taking following yesterday's selloff to new lows.
  • Some traders are expressing concerns about potential winterkill in the HRW crop due to the intense cold across the region. Some crop watchers say 15% to 20% of the crop is at risk.
  • But the HRW crop went into dormancy in good shape and snow cover over other regions and over the SRW crop is seen as protecting that crop.
  • Traders continue to fret U.S. wheat is not competitively priced on the global market. This morning's Weekly Export Sales Report added to that concern. It showed export sales of just 248,500 MT for 2013-14 and 8,000 MT for 2014-15, which was below expectations.
  • Traders are also waiting on results from Egypt's wheat tender issued for an unspecified amount. But Egypt has only purchased EU or Black Sea-region wheat since July.
  • Gulf SRW wheat basis is steady at midday.

 

Live cattle futures continue to trade slightly higher following a gap-higher opening in the February contract. Feeder cattle futures are slightly to moderately higher.

  • Cattle futures surged at the opening on record-setting cash cattle trade at mostly $137 in Kansas and Texas yesterday. Trade in Nebraska took place from $138 to $139. Futures are at a slight discount to the bulk of trade on the Southern Plains.
  • February futures gapped higher, traded lower in an attempt to fill the gap and then turned higher as the attempt to fill the gap failed. Futures are near their highs for the day.
  • Wholesale beef prices are providing support for today's upswing. Choice boxed beef rose $1.72 to $202.27 per cwt. while Select beef gained $1.32 to set a new record at $197.37. Movement is quite light at 57 loads.
  • Weakness in the U.S. dollar index and corn market are adding support to feeder cattle futures.
  • Weekly beef export sales of 2,500 MT for 2013 and 9,200 MT for 2014 were down slightly from the week prior. But the tally was decent considering it was for the week of Christmas.

 

Lean hog futures remain mixed at midday.

  • Traders are engaging in some positioning ahead of the weekend amid a mix of fundamental factors. The market is seeing some profit-taking following yesterday's gap-higher open and strong finish in the February contract. That contract has failed to take out yesterday's high in today's trade.
  • In addition, the front-month contract remains at a $7-plus premium to the cash index, which limits buying interest.
  • Traders continue to look for signs of a seasonal low. Back-to-back weeks of frigid temps have notably slowed hog movement. And with packers enjoying strong profit margins and coming off of consecutive holiday weeks, demand is high. Cash hog bids are steady to higher as packers plan on a large Saturday kill..
  • Also, the porcine epidemic diarrhea virus (PEDV) means supplies are tighter than many anticipated.
  • But the pork cutout is softening as traders worry the recent heavy snowstorm in the east will trim meat demand. The pork cutout slipped 47 cents this morning but movement is a positive 264.83 loads.
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