Market Snapshot, 10:00 a.m. CT -- (VIP) -- March 6, 2014

March 6, 2014 04:00 AM
 

Corn futures are enjoying gains of 2 to 5 cents with old-crop leading to the upside.

  • Confirmation of still-strong demand for U.S. corn despite recent price gains is lifting the market today.
  • This morning's Weekly Export Sales Report showed corn sales of 1.518 MMT for 2013-14 and 164,500 MT for 2014-15, which was well above expectations and 35% above the prior four-week average. Exports in excess of 1.138 MMT were also impressive.
  • Spillover from the soybean market along with a weaker U.S. dollar index are also supportive.
  • Gulf basis is steady this morning.
  • Nearby contracts have found technical support at the 200-day moving average after moving above this level this week for the first time in more than a year.

Soybean futures continue to enjoy gains of 4 to 11 cents with old-crop futures double-digit higher.

  • After a mild setback for some contracts yesterday, traders have returned as active buyers. Confirmation that demand for U.S. soybeans remains strong adds incentive to that end.
  • Weekly export sales of 772,700 MT for 2013-14 and 256,700 MT for 2014-15 topped expectations by a wide margin. Also of note, China was again the lead recipient of soybean exports of more than 1.138 MMT, signaling it still needs U.S. beans.
  • The market has long anticipated major Chinese order cancellations of U.S. beans, but so far just minor cancellations have been announced. This signals an increase to USDA's export projection is likely warranted.
  • Soymeal export sales were also impressive for the week ended Feb. 27 at 232,800 MT for 2013-14 and 35,800 MT for 2014-15.
  • Gulf soybean basis rose 4 cents for immediate delivery, possibly signaling more export demand news is ahead.

SRW wheat futures are narrowly mixed, while HRW and HRS wheat are mostly 1 to 3 cents higher.

  • A risk-on attitude across the commodity sector this morning is lifting wheat after it was weaker in overnight trade.
  • The technical posture of the wheat market still favors market bulls.
  • Meanwhile, traders remain wary about the situation between Ukraine, Crimea and Russia and whether this will slow the nation's grain exports.
  • Light support stems from news the Food and Agriculture Organization of the United Nations (FAO) in its first 2014-15 global wheat crop forecast pegged the crop at 704 MMT, down 1.7% from 2013-14.
  • Support also stems from this morning's Weekly Export Sales Report, which showed sales of 556,100 MT for 2013-14 and 44,400 MT for 2014-15. The tally was up sharply from last week.
  • Weekly wheat exports of 633,100 MT were up 16% from the previous week, with Brazil the lead destination.

Live cattle futures are posting slight losses in most contracts. Feeder cattle futures are moderately lower.

  • Live cattle futures are facing light followthrough selling today after the April live cattle contract posted a key bearish reversal yesterday.
  • In addition, traders are discouraged that light cash cattle trade got started at $2 lower prices of $148 yesterday in Kansas in Texas and at $150 in Nebraska, despite tighter showlists and surging beef prices.
  • However, nearby futures are at least $4 below these prices, limiting any bearish reaction.
  • Packers have reduced kills in an effort to improve profit-margins, which have been in the red for a long time.
  • Also helping to limit pressure is the ongoing surge in beef prices. Yesterday, Choice cuts jumped $2.75 and Select rose $2.19. Movement was again on the lighter side at 139 loads, however.
  • Beef export sales the week ended Feb. 27 were down marginally from the week prior at 11,100 MT.
  • Gains in the corn market are adding profit-taking incentive for those in the feeder cattle market.

Nearby lean hogs are moderately higher while far deferred months are mixed.

  • Ongoing improvement in the product and cash markets and some mild bargain buying are lifting the hog market today.
  • A few are viewing yesterday's setback in prices as a bargain buying opportunity, though the technically overbought condition of the market has many on watch for a market top.
  • Meanwhile product market performance continues to impress -- possibly thanks to historically high beef prices. The pork cutout value rose $1.12 yesterday and movement was strong (especially considering lofty prices) at 482.67 loads.
  • And cash hog bids are seen as much as $2.50 higher thanks to tight supplies and strong demand. Packer profit margins have improved this week after diminishing to near breakeven.
  • Supply tightness is thought to be tied to the spread of the porcine epidemic diarrhea virus.
  • Losses in the U.S. dollar index are also supportive today.
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