Markets look at weather, South America for direction

2013-02-08T04:00:00Z Markets look at weather, South America for directionBy Brian Hoops, Market News columnist The Prairie Star
February 08, 2013 4:00 am  • 

For the week, Chicago wheat closed $.11 1/2 lower; Kansas City wheat $.07 1/2 lower and Minneapolis wheat $.12 1/2 lower.

Last week, exporters did not report any private sales. In the weekly export sales report, wheat sales were 14.3 mb, below the 15.8 mb needed each week to reach the USDA’s forecast of 1.05 bb.

Plains States reported that winter wheat crops continued to face declining January conditions due to the dire drought.

Twenty percent of the Kansas wheat crop was rated GD/EX in late January, down 4 percent from late December, while 8 percent of the Nebraska wheat crop was rated in the same category (down 14 percent) and just 3 percent of the South Dakota crop was rated GD/EX.

The ongoing drought should provide support to wheat once wheat breaks dormancy.

Until then, producers should be aware the U.S. dollar is sitting on major support and could begin to rally. If this occurs, grains and particularly wheat, could face additional selling from index funds.

Kansas City producers are 80 percent sold of the 2012/13 production. Producers are 50 percent sold of 2013/14 production.

MW wheat producers are 80 percent sold of 2012/13 production. Producers are 50 percent sold of 2013/14 production.

Corn

Corn closed the week $.15 1/4 higher. Last week, private exporters did not report any private sales.

In the weekly export sales report, corn sales shows 10.0 mb slated for 2012/13. This is below the 13.3 mb that is needed to stay on pace with the USDA forecasts of 950 mb.

Corn continues its climb post the monthly USDA supply/demand report with gains coming in the front months. I would expect this pattern to continue, with strength in the old crop coming from tighter than expected ending stocks and fund short-covering, while weakness will be seen in the new crop contracts as the trade is anticipating an increase in planted acres for 2013.

The market shouldn’t experience any sharp rallies as export demand remains weak overall until spring when weather becomes a major pricing influence.

Producers are now 80 percent of 2012/13 crop and are also 40 percent sold of the 2013/14 crop. Re-owned 50 percent of the 2012/13 corn crop with July calls.

Cattle

Live cattle ended the week $5.87 higher while feeder cattle ended $1.25 higher.

Last week, cash trade developed in the South at $125, $2 higher compared with a week ago. In Nebraska, trade developed at $201, $4 higher when compared with last week.

Cash traded higher and the futures rallied as well. The premium between the cash and the futures has been erased, leaving cattle futures on solid footing and in a position to rally.

On the weekly charts, futures rallied off the weekly uptrend line.

Winter weather conditions should give the market a boost and seasonal highs are not normally scored until March.

Look for prices to work higher during February as supplies remain tight for cattle.

Producers currently have no hedges in place.

Feed costs should be covered in corn futures/options or cash product through July, 2013 when prices pulled back to support.

Copyright 2012

Midwest Market Solutions, Inc.

Copyright 2014 The Prairie Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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