Market Snapshot, Noon CT (VIP) -- January 7, 2014

January 7, 2014 06:07 AM
 

Corn futures have turned 1 cent lower in light trading.

  • Trading activity is limited and confined to a narrow trading range as traders await the barrage of USDA reports due Friday.
  • Futures have mild support on concerns about dryness in Argentina's major production regions, but rains have returned to the forecast for the next several days.
  • Traders also look for feed demand to rise as a result of the arctic cold that has swept across the U.S. Confirmation of the boost in feed demand will not come until the March Grain Stocks Report, however.
  • The stronger U.S. dollar index is a negative.
  • Gulf corn basis is steady at midday with the exception of a 1-cent rise for May delivery.

 

Soybean futures have softened to trade 2 to 7 cents lower, with the exception of the January contract, which is slightly higher.

  • Nearby futures are gaining support from USDA's announcement China bought 350,000 MT of U.S. soybeans for 2013-14 delivery.
  • However, buying interest is limited as traders wait for USDA's reports on Friday.
  • The stronger U.S. dollar index is limiting gains.
  • Traders continue to ignore current high temps in Argentina as forecasts call for milder temps and some precipitation. However, some private crop watchers say significant damage to the bean crop has already occurred.
  • Favorable weather in Brazil for crop development is keeping a lid on buying interest in nearby contracts and is contributing to the bull spreading. The same can be said for prospects for a rise in planted soybean acreage in the U.S. this spring.
  • Gulf soybean basis has weakened by 2 cents for immediate delivery at midday with basis holding steady for all other delivery periods.

 

Wheat futures have turned choppy, with SRW down 1 to 2 cent in nearby contracts. HRW is around a penny higher and HRS is narrowly mixed.

  • The intense cold weather is boosting trader concerns about winterkill in the Plains. While many areas are insulated from the arctic blast this week, some key areas are exposed. These include much of Nebraska, southwest and south-central South Dakota and north-central Kansas.
  • But more seasonal temperatures are forecast to arrive later this week, which suggests winterkill concerns will eventually fade.
  • Gains in the U.S. dollar index are a source of light pressure.
  • Traders' expectations USDA will report a slightly rise in winter wheat seedings from year-ago on Friday is also limiting buying interest. USDA's Supply & Demand Report on Friday is also expected to remind traders of ample l global wheat supplies.
  • SRW Gulf wheat basis is steady at midday, suggesting no fresh supportive export news is in the works.

 

Live cattle futures slightly lower. Feeder cattle futures are slightly to moderately lower with the exception of the front-month, which is slightly higher.

  • Light profit-taking continues to dominate trade following recent gains.
  • Traders continue to await the results of cash negotiations following the posting of record highs last week.
  • Showlist estimates are sharply higher in Nebraska but around 2,000 head tighter in both Kansas and Texas this week.
  • Traders look for the extremely cold temperatures in the Midwest and Plains to moderate soon, but it will take a while for cattle to recover. This will keep pressure on already tight cattle supplies.
  • Boxed beef prices continue to surge, with Choice up $1.07 to $206.61 per cwt. and Select up $1.65 at $203.03 per cwt. this morning. But movement is light at 76 loads.
  • Nearby futures continue to trade just below the bulk of last week's trade in Texas and Kansas at $137 and are still in the upper half of yesterday's trading range.
  • Feeder cattle futures continue to see light trading as traders balance between profit-taking and followthrough buying after several contracts posted contract highs yesterday.

 

Lean hog futures continue to trade moderately lower after a gap-lower opening.

  • Futures gapped lower on the wide premium February futures holds to the cash hog index. Lack of followthrough on last week's rally is also prompting profit-taking.
  • The gap-lower opening saw February futures slip through the upside gap left on Jan. 2, but this morning's recovery from the downside gap filled both that gap and today's gap. That could set up the $85.00 area as support.
  • Traders are looking for direction from the cash market, which is struggling to return to normal following the disruption in both transportation and plant operations. But some traders worry hog runs are backing up as a result.
  • The pork cutout value rose $1.46 today but movement was decent at 195.6 loads. Traders are trying to sort out whether recent light movement is a result of weather disruptions or retail resistance.
  • Strength in the U.S. dollar index is adding to the price pressure.
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