Overnight Bargain Hunting Lifts Grains, Soybeans

Grain and soybean futures are slightly higher in overnight trading, possibly the result of bargain hunting after Thursday’s losses.  \r\n   Stock market futures also are slightly higher after steep losses on the first trading day of 2014, a move that is being attributed to bargain hunting.\r\n   Still hanging over the market, however, is the weather in South America, which appears to be nearly ideal.  Even some dryer areas received rain Thursday, some of it unexpected, market sources said.  \r\n   And US farmers are sitting on large quantities of corn and soybeans that many market analysts expect will be sold in the next few weeks as farmers try to take advantage of high basis levels before the South American crops hit the world markets.\r\n   Add to that the continued flap over China’s rejection of US corn and DDG cargoes because of an unaccepted GMO variety, which could back up corn and soymeal stocks in the US, and the overall fundamental picture is bearish for grains and soybeans.\r\n   That is, unless traders are considering the annual index fund rebalancing act when funds realign portfolio weights to return them to mandated levels, according to Agrimoney.com.  This means selling commodities that have gained in value over the last year and buying the losers, which could include corn after its 40% loss over 2013.  Speculators could be waiting in the bushes for this rebalancing to start.\r\n   But that didn’t stop cattle markets Thursday.  Cash and futures markets started the year with record high prices in spite of large losses by packing plants.\r\n   Feb live cattle Thursday settled at $135.62, near the top of the day’s trading range, indicating prices could go higher today, and they are following through with higher prices in the overnight session.\r\n   The strength of cash cattle markets caught some traders by surprise Thursday.  Packing plants are thought to be losing heavily on each animal slaughtered, yet they paid $3 to $4 per cwt more for slaughter-ready cattle this week than they did last week.  Cattle traded in the Plains Thursday at $137 to $139 per cwt on a live basis and at $218 to $219 on a dressed basis.  More of the same is expected today, although volumes could be thinner.\r\n   Feeder cattle futures also are up in overnight action, likely gaining strength on the back of lower corn futures and higher live cattle.  Feeders could continue to gain strength from lower corn prices, which could happen, according to Paul Georgy, president of Allendale, Inc.\r\n   Technical damage to the soybean and wheat charts yesterday may have a longer lasting effect unless we can quickly stop the freefall,” Georgy said in his morning comment.  â€œMarch soybean contract closed below the key 100 and 200 day moving averages. March wheat closed below the psychological 6.00 level on Thursday.”\r\n   The northern Plains, Midwest and the Northeast US today are dealing with a blast of arctic air that has temperatures in some northern locations dipping well below zero.  Heavy snow also is covering some areas.  Here is a current radar map showing the latest storm system moving across New England and out to sea. <a href=\”http://images.intellicast.com/WxImages/Radar/usa.gif\”>Your text to link…</a>.\r\n   Boxed beef markets Thursday failed to hold recent gains, and it looks like packers will have a hard time passing along this week’s higher cattle prices.  The USDA reported only light demand for product.\r\n   The USDA reported choice boxed-beef cutout values Thursday at $200.55 per cwt down $0.10.  Select beef was off $0.36 per cwt at $196.05.  The choice/select spread widened to $4.50, and there were only 79 loads of fabricated product sold into the spot market.\r\n   The CME Feeder Cattle Index for the seven days ended Wednesday was $167.48, up $1.17.  The Jan feeder cattle futures contract settled Thursday at $167.00, up $0.30.\r\n