Market Snapshot, 10:00 a.m. CT -- (VIP) -- March 14, 2014

March 14, 2014 05:00 AM

Corn futures faced mild pressure with the start of day trade, but the market has since improved to post fractional to 3-cent gains.

  • Traders are favoring the upside as they even positions ahead of the weekend.
  • Weakness in the U.S. dollar index and uncertainty about what impact a weekend referendum in Crimea to join Russia will have on grain trade are giving bulls an edge.
  • Light support also stems from news China's state corn stockpile for 2013-14 is expected to reach a record-high of 60 MMT by the end of April, according to China National Grain and Oils Information Center. Stockpiles already total 54.66 MMT.
  • Gulf corn basis is 1 to 3 cents lower this morning for nearby delivery, reflecting improved transportation and freight costs as rivers thaw.

Soybean futures 3 to 6 cents lower this morning.

  • Traders are taking advantage of yesterday's gains by booking some profits ahead of the weekend. There is also some uncertainty as to whether beans have put in a near-term top.
  • Traders continue to try to sort out China's cancellations of South American bean supplies this week. There has been speculation this could be a sign of reduced demand due to negative crushing margins and reduced feed demand due to bird flu and declining pork prices.
  • On the other hand, a grounded ship carrying soybeans is blocking the main waterway at Argentina's top grain port, reminding of South America's struggle to get beans shipped in a timely manner.
  • Meanwhile, unionized dockworkers are holding a one-day work stoppage as they are seeking better wages. They say they will start a strike March 25 if wage talks do not start by then.

Wheat futures are again leading the grain market higher, with most contracts of all three flavors up 13 to 15 cents.

  • Traders' focus is on evening positions ahead of the weekend referendum in Crimea on a proposal to join Russia. Such a move is expected to further inflame the Ukrainian crisis. Traders believe this could eventually boost demand for U.S. wheat.
  • Ukraine grain stocks stands at 16.2 MMT as of March 1, which is up 23% from year-ago, according to the State Statistics Service. The country still plans to export 33 MMT in 2013-14.
  • Gulf HRW basis is 2 to 5 cents firmer for nearby delivery this morning, possibly signaling improved demand. SRW wheat basis is steady in all but May, which is 5 cents softer.
  • The posture of the wheat market remains fully bullish.
  • A weaker U.S. dollar index and drought on the Southern and Central Plains is also supportive.

Live cattle futures are posting slight gains in most contracts. Feeder cattle futures are also stronger.

  • Cash cattle trade got started Thursday at $148 on the Southern Plains and edged up to $148.50. Last week trade took place at mostly $148 in the region.
  • Strong weekly gains in the boxed beef market this week along with tighter showlist estimates led to steady to higher cash action. Positive packer profit margins also helped.
  • April live cattle are around $4 below these prices while June is roughly $11 below these prices, giving traders incentive to add long positions ahead of the weekend.
  • But the boxed beef market has given some early signs a top may be near or in the works. Yesterday Choice beef values slipped 21 cents and Select rose 11 cents. Movement was again light at 114 loads.
  • Traders in the feeder cattle market are favoring the upside as they ready positions for the weekend. Tight supplies and the bullish chart posture of the market are setting the tone.
  • A weaker U.S. dollar index also favors market bulls.

Lean hog futures are posting moderate losses this morning.

  • Traders are encouraged that a mid-week price break was followed up with strong to limit-higher gains yesterday. This eased concerns the market may be in the process of putting in a top.
  • But today, futures are seeing some mild profit-taking as traders look to take advantage of yesterday's gains and reduce risk ahead of the weekend.
  • Fundamentally, traders are encouraged by the ongoing rally in the product market. The pork cutout value firmed another $1.12 yesterday to a record high of $120.62 per hundredweight. While movement was relatively light at 268.69 loads, the market has not yet given signs worth noting that the rally has run out of steam.
  • Pork strength has kept packer profit margins in the black and demand strong. This has kept cash hog bids and the cash hog index trending higher this week.
  • In addition, traders remain concerned about the continued spread of the porcine epidemic diarrhea virus (PEDV).
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