Market Snapshot, 10:00 a.m. CT -- (VIP) -- March 13, 2014

March 13, 2014 04:58 AM

Corn futures have softened to post losses around 2 to 4 cents.

  • Corn has taken a followers' role to wheat this week. A pullback by wheat into negative territory has pulled corn lower as well.
  • But outside of profit-taking, selling interest remains relatively limited as demand remains strong.
  • USDA's Weekly Export Sales Report reminded of this. While sales of 683,400 MT for 2013-14 and 103,600 MT for 2014-15 met expectations, the overall tally is strong. Exports were also solid at 907,400 MT.
  • A 2-cent uptick in Gulf corn basis for April delivery also reminds of solid demand.

Soybean futures have softened to mixed trade.

  • Early gains in the soybean market have given way to some mild profit-taking. But traders are hesitant to push futures sharply lower again as supplies are tight and export demand remains strong.
  • Reuters is reporting this morning that China has canceled 10 cargoes (up to 600,000 MT) of soybean purchases from South America, as widely rumored yesterday. Export sources say China is looking to cancel or delay another 30 cargoes of soybean commitments because of weak demand and poor crush margins.
  • But the nation's demand for U.S. beans was solid the week ended March 6. Weekly soybean sales of 113,500 MT for 2013-14 and 776,900 MT for 2014-15 more than doubled expectations, with China as the lead buyer of new-crop beans.
  • Light pressure also stems from more disappointing economic news from China. Industrial output and retail sales the first two months of the year came in lower than expected at 8.6% and 11.8% above year-ago, respectively.
  • A 12-cent drop in Gulf basis for immediate delivery along and a 3- to 4-cent decline for April through June delivery does raise demand concerns, however.

Wheat futures have softened to trade 6 to 8 cents lower in the SRW wheat market, with the exception of the front-month which is double-digit higher. HRW wheat is 4 to 6 cents lower while HRS wheat is down 3 to 6 cents.

  • A surge in the wheat market overnight has given way to profit-taking.
  • Some traders are also taking a step back to wait and see how the weekend vote turns out regarding Crimea.
  • This week's National Drought Monitor reflects a slight expansion and an increase in the intensity of drought conditions in the Central and Southern Plains.
  • Traders are brushing off this morning's Weekly Export Sales Report that showed wheat sales of 476,900 MT for 2013-14 and 89,200 MT for 2014-15. While the overall tally topped expectations, this was not the impressive showing for which traders had hoped.
  • USDA's ag attaché in Canada says that shipping delays have forced some mills in Eastern Canada to shut down and other milling operations also say they may have to soon close their doors. This follows news Canada's government will fine the nation's major railways if they do not double grain transport in the next several weeks.
  • HRW Gulf wheat basis is steady, but SRW basis 10 cents lower for May delivery. Other SRW delivery months are steady to 4 cents lower. This adds to the negative tone.

Live and feeder cattle futures are posting slight to moderate losses in early trade.

  • Traders are reducing risk as they wait for cash cattle trade to get underway.
  • Feedlots have passed on cash bids of $146, as they feel tighter showlist estimates and boxed beef market strength warrant higher cash prices relative to last week's $148 cash action on the Southern Plains and $150 trade in Nebraska.
  • Choice boxed beef firmed 4 cents and Select fell 95 cents yesterday. The pullback from recent strong gains could signal a top is near after the surge to new records. This did improve movement to 141 loads, however.
  • Weekly beef export sales of 17,700 MT for 2014 marked a new marketing year high.
  • Feeder cattle futures are seeing mild profit-taking after yesterday's strong gains.

Lean hog futures are moderately higher in early trade.

  • Nearby lean hog futures gapped higher on the open, though light profit-taking thereafter filled the gap for some contracts.
  • Some packers are still in need of supplies for week's end after another winter storm event disrupted transportation in some areas. Plus, supplies have been tightened by the spread of the porcine epidemic diarrhea virus (PEDV). Therefore, early cash hog bids are $1 higher.
  • The product market also continues to impress. The pork cutout value surged $3.04 yesterday and, even more notable, movement picked up to 414.33 loads. This is impressive, considering record-high pork prices.
  • This has lifted packer profit margins this week, giving them incentive to keep kill lines full.
  • However, bullish enthusiasm is countered by uncertainty about how much higher prices can go, especially with April futures at a sharp premium to the cash index and the Relative Strength Index signaling the market is heavily overbought.
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