Market Snapshot, 10:00 a.m. CT -- (VIP) -- March 21, 2014

March 21, 2014 05:19 AM

Corn futures are mostly 2 cents lower on spillover from neighboring pits.

  • Position evening is underway after yesterday's selloff and continuing weakness in wheat and soybean futures. But corn is holding up relatively well given sharp pressure on soybeans.
  • Spillover weakness from those two markets is still a factor but a weaker dollar is helping to limit pressure.
  • Also limiting pressure is this morning's news from USDA that Egypt, a known value buyer, purchased 340,000 MT of U.S. old-crop corn.
  • Overall, news on the export front remains positive along with higher-than-year-ago ethanol production numbers.
  • Traders have moved to a wait-and-see attitude regarding tensions in the Black Sea region ahead of any potential weekend events.
  • The lead May contract is testing support at recent lows ranging from $4.73 1/4 to $4.75.
  • But concerns about domestic feed demand due to the PEDV outbreak and tightening cattle feedlot numbers have traders reluctant to push prices higher.

Soybean futures are 12 to 20-plus cents lower with old-crop contracts leading declines.

  • Technical selling and profit-taking are pressuring futures sharply.
  • Traders are shrugging off the slightly weaker U.S. dollar index as that action is seen as corrective following recent strength.
  • Technical selling increased as the July contract moved through support at the $14.00 area, but May beans remain above this key mark.
  • Chart watchers view the recent volatile price action as a potential topping signal and are evening positions to reassess market direction.
  • Traders are ignoring news a top official at Shinograin Oils Corporation says China's 2013-14 soybean imports are expected to be up 13% from the previous year. Traders view the news as already factored into prices. To them, the key is "where" those supplies come from as the U.S. export window has remained open longer than usual.

Wheat futures are generally 4 to 10 cents lower across all three wheat flavors.

  • All wheat flavors are lower as traders pocket profits and even positions ahead of the weekend.
  • While futures have marked strong losses, no major technical damage has been done as yet on the charts.
  • The situation in Ukraine continues to occupy trader attention as a substantial premium has been built into prices on the tensions in that key grain exporting region.
  • Also supportive are concerns about the HRW wheat crop, as little is in the forecast in terms of rains for the Central and Southern U.S. Plains the next seven to 10 days. But this is being ignored as traders' focus is on evening positions.
  • Gulf HRW wheat basis is up 5 cents for immediate delivery, while SRW basis is steady this morning.

Nearby live cattle futures have slipped after a firmer opening. Deferred contracts are slightly higher. Feeder cattle futures are slightly higher.

  • Cattle futures opened slightly firmer after cash cattle moved to $150 yesterday in the Southern Plains.
  • But position evening ahead of this afternoon's Cattle on Feed Report is resulting in choppy trade.
  • Traders look for the report to continue to show tight supplies with the On Feed expected at 98.9% and Marketings expected at 97.0% of year-ago levels.
  • Placements are expected to come in at 109.7% of year ago due to the continuing drought in the Southern Plains.
  • April futures are now trading at a $6 discount to the $150 cash cattle trade yesterday in the Southern Plains, which is limiting selling.
  • Traders are watching for followthrough from yesterday's key bearish reversal as a signal a top has been posted. Earlier in the month, a similar technical signal was followed by a period of price stability and then the latest rally.
  • Feeder cattle are firmer on the recent weakness in corn prices.

Lean hogs are choppy with April higher and June weaker.

  • Hog futures are mixed amid position evening ahead of the weekend.
  • The fundamental situation remain very strong with cash prices at record highs and disease concerns raising questions about future supplies.
  • The National Animal Health Laboratory Network says 296 new cases of PEDV were confirmed the week ended March 9. While down from the previous week, it still represents an elevated amount.
  • Meanwhile, pork cutout values firmed 93 cents yesterday to rise above $130 per cwt. Movement slowed to 280.09 loads.
  • Packers' profit margins remain in the black, which is encouraging them to keep kill lines running as full as possible amid tighter-than-expected marketings.
  • April lean hog futures still hold more than a $6 premium to the cash index, which limits buying interest for the moment. But the cash index continues to rise.
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