Market Snapshot -- Noon CT (VIP) -- April 12, 2013

April 12, 2013 07:02 AM
 

Corn futures continue to enjoy gains around 2 to 6 cents with old-crop contracts leading gains.

  • Traders continue to cover short positions in the corn market ahead of the weekend, encouraged by tight old-crop supplies and weather concerns.
  • Gulf basis levels firmed 1 to 3 cents for April delivery this morning and another penny for late April delivery at midday. This signals some export buying may be occurring.
  • Basis levels around the country are also historically strong, signaling slow farmer selling of a small crop.
  • This emphasizes the importance of a rebound in production for 2013. Cold, wet weather in the Corn Belt has kept farmers out of the field. While this is not yet overly worrisome, the forecast for more of the same, if realized, could lead to planting delays.
  • Strong gains in the wheat market on HRW crop worries are also providing spillover support.

 

Soybean futures have seen very choppy trade today. Old-crop futures are currently 4 to 10 cents higher; September is up a penny; and new-crop is mixed.

  • Old-crop beans continue to benefit from tight supplies and indications export demand for U.S. beans remains solid.
  • Gulf basis levels have been on the rise of late, signaling export bargain buying may be occurring. This morning, Gulf basis rose 4 cents for immediate delivery and at midday it was up 2 to 5 cents for late April and May delivery.
  • New-crop beans initially benefited from USDA's announcement of a 110,000-MT bean sale to unknown destinations for 2013-14 delivery. But this has since given way to profit-taking and bull spreading activity, encouraged by the possibility some corn acres may be switched to soybeans if cold, rainy conditions persist, as expected.
  • Plus, many suspect USDA underestimated soybean plantings in its March 28 Prospective Plantings Report.

 

Wheat futures have extended early gains to post gains in the mid- to upper teens in Chicago and the Kansas City. Minneapolis wheat is 14 to 20-plus cents higher.

  • On Monday, the market will get another HRW crop condition update from USDA and additional reductions are fully expected after the freeze event across the Central and Southern Plains this week. This is encouraging short-covering ahead of the weekend.
  • Adding to concerns is a forecast for another possible freeze event in areas of Kansas and the Texas Panhandle next week.
  • Gauging the full extent of any freeze damage will likely take several weeks, however.
  • In addition, wheat is benefiting from yesterday's confirmation of Chinese SRW wheat buys and anticipation of more such buys.

 

Live cattle futures continue to enjoy slight gains, while feeder cattle futures are under light pressure.

  • Cash cattle trade thus far this week has taken place at prices mostly around a $1 below the previous week -- around $127 in the Southern Plains. Some additional sales are expected in northern locations today.
  • Concerns about beef demand was the culprit for lower trade despite tighter showlists this week and negative profit margins for packers.
  • This morning, Choice boxed beef values fell 28 cents and Select was up 13 cents. Movement was again unimpressive at 84 loads.
  • Beef movement improved yesterday on a beef price break, but generally speaking both prices and movement have been lackluster this week.
  • But traders are cautiously covering short position on hopes this will soon turn around. Grocers are heavily featuring premium cuts of beef on the front page of this week's ads.
  • Strength in the corn market is encouraging followthrough selling in feeder cattle futures.

 

Lean hog futures have softened to narrowly mixed trade.

  • Some plants are in need of additional supplies for a large Saturday kill after a winter storm event disrupted operations earlier this week. This has led to scattered firmer cash hog bids, though most locations are keeping bids steady as their margins are in the red.
  • The April lean hog contract is trading in line with the cash hog index. It expired at noon CT today. The sharp premium the new front-month June contract holds to the index is putting light pressure on the contract.
  • Some traders are engaging in light short-covering on recent price and movement improvement in the pork market. This morning, however, the pork cutout value fell 90 cents on movement of 238.7 loads.
  • Some expect that when grilling demand does pick up, consumers will opt to throw relatively cheap pork on the grill over beef. Disappointing retail sales data that points to slowed economic growth adds to such ideas.
  • The forecast for below-normal temps for much of the country is also tempering such expectations as this is not ideal grilling weather.
     
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