Market Snapshot, Noon CT (VIP) -- January 8, 2013

January 8, 2013 05:59 AM
 

Corn futures are marginally to 6 cents higher, with nearbys leading gains.

  • Traders continue to focus on evening positions ahead of USDA's key reports on Friday. Traders don't want to be caught surprised on either side of the market, as the January reports have a reputation for producing a limit move.
  • Traders look for USDA to trim the size of the 2012 crop slightly, but to raise carryover from last month due to lackluster demand. The wildcard will be the Grain Stocks Report, as it's a true reflection of the usage pace.
  • Sources report South Korea has purchased more than 315,000 MT of optional-origin corn (all South American) since Friday to capitalize on the latest decline in price.
  • Additional support is coming from concerns surrounding the Argentine corn crop. While conditions have improved, producers are still struggling to plant the last 20% of the corn crop.
  • March corn futures continue to pivot around yesterday's high of $6.90, but have posted a daily high of $6.94 1/2. The contract needs to return to the $7.20 level to signal a near-term low is in the works.

 

Soybean futures are 1 to 7 cents lower on strength in the dollar index.

  • Soybean futures are seeing a choppy day of trade, but haven't strayed too far from unchanged in either direction. Futures are currently trading mid-range.
  • Commercials were active buyers yesterday, but haven't returned to extend positions today.
  • Focus is also on evening positions ahead of Friday's key USDA data. Traders look for USDA to raise the size of the soybean crop slightly and for carryover to climb by around 5 million bu. from last month.
  • Pressure is also coming from mostly favorable weather across most of South America. Northern production areas of Brazil are expected to see rain this week and conditions in Argentina have improved for planting.
  • Chinese soybean imports in January may fall to 4.6 million tons compared to around 5.4 million tons in December, the state-backed China National Grain & Oils Information Center says.
  • March soybean futures are pivoting around resistance at yesterday's high of $13.89 1/2.

 

Wheat futures are mostly 2 to 4 cents higher at all three exchanges.

  • Wheat is taking its cue from the corn pit, as well as ideas recent losses are overdone. Traders are working to correct the severely oversold condition of the market.
  • The U.S. dollar index remains strong, which is limiting buying to short-covering.
  • Also limiting buying is the forecast for beneficial rains across much of the Southern Plains today and tomorrow.
  • Traders are also focused on evening positions ahead of a barrage of USDA data on Friday. Traders look for the winter wheat seedings data to show all winter wheat acreage at 42.6 million.
  • State weather forecasters say Ukraine's winter grains crops are rated much better than year-ago but 12% of the crop is underdeveloped and vulnerable to winterkill.
  • March Chicago wheat futures so far remain within the boundaries of yesterday's trading range and needs to return above the $7.90 level to signal a near-term low is in the works.

 

Live cattle futures have trimmed early losses and are trading mid-range at midday.

  • Live cattle futures remain on the defensive amid profit-taking, but have trimmed earlier losses.
  • Boxed beef prices are firmer this morning, which helped futures move off session lows Choice values are up 53 cents and Select prices are up 68 cents on strong movement of 111 loads.
  • But this week's showlist is up from last week after only light cash trade was reported at $128, giving feedlots less bargaining power.
  • Feeder cattle futures have weakened to trade slightly to sharply lower due to strength in the corn pit.

 

Lean hog futures are slightly higher, but buying is being limited by weakness in live cattle futures.

  • The cash hog market is mostly steady this morning but a firmer tone has developed, signaling packers are in need of supplies. Other packers aren't willing to raise bids as they work to improve negative profit margins.
  • February lean hog futures are trading at around a $3 premium to the cash index, which signals traders are cautiously optimistic toward cash.
  • Negative outside markets are limiting buying enthusiasm in livestock futures this morning.
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