Market Snapshot, 10:00 am CT (VIP) -- April 10, 2013

April 10, 2013 05:12 AM
 

Corn futures have seen choppy action today and are currently posting slight losses through the March contract, while far-deferred months are mixed.

  • Traders are positioning ahead of USDA's Supply & Demand Report at 11:00 a.m. CT.
  • Pre-report expectations are for USDA to raise its carryover estimate by 192 million bu. from March to 824 million bushels. Traders expect USDA to raise its world corn carryover peg by 2.72 MMT to 120.2 MMT.
  • Pressure is being limited by a 47,000-barrel-per-day surge in ethanol production to 854,000 bpd last week -- the highest level since June 2012. The 5.8% weekly percentage increase was the largest since December 2010. The drop in corn prices has boosted margins and thus production.
  • Also pointing to improved demand is recent strength in Gulf basis levels. Gulf basis firmed a penny for immediate delivery this morning.
  • A blast of cold air and wintry precip is adding concerns about a late start to the U.S. planting season, especially with more below-normal temps and above-normal precip in the forecast for the Corn Belt over the next 14 days.
  • Somewhat offsetting this, however, is news of an unusual Japanese purchase of three cargoes of South African corn.

 

Soybeans have been chopping around unchanged this morning. Old-crop contracts are currently favoring the downside while new-crop futures are mostly firmer.

  • Positioning ahead of USDA's Supply & Demand Report is the dominant action in the bean market today.
  • Pre-report expectations are for USDA to raise its 2012-13 carryover estimate for the U.S. by 12 million bu. to 137 million bushels. The market expects USDA to trim its global soybean carryover estimate marginally to 60.1 MMT.
  • Chinese trade data delivered mixed signals for the bean market today as it showed China imported 3.84 MMT of soybeans last month, which is up 32.4% from February, but down 20.5% from year-ago.
  • Also, China reported a trade deficit of $884 million in March following a surplus of $15.25 billion in February. The country has launched an investigation into the overstated export numbers since December.
  • Gulf soybean basis has improved recently; it rose another 2 cents for immediate delivery this morning. This could signal some bargain buying is occurring among exporters.
  • However, today's S&D Report is expected to remind the market of ample South American supplies that will soon come available.

 

Wheat futures have extended overnight losses to trade mostly 8 to 14 cents lower, with Minneapolis futures leading losses.

  • Traders are squarely focused on reducing risk ahead of the Supply & Demand Report.
  • They expect USDA to report 2012-13 wheat carryover rose around 15 million bu. from last month to 731 million bushels. Traders expect global wheat carryover to come in around 178.6 MMT, up marginally from last month.
  • The market is thus far ignoring reports of sub-freezing temps as far south as northern Texas overnight. It will take a couple of weeks to assess damage.
  • News Brazil doubled the amount of wheat that can be imported duty-free from outside the Mercosur trading bloc to 2 MMT through July 31 is being ignored.

 

Live cattle futures got off to a mixed start, but they have since softened to post slight to moderate losses. Feeder cattle futures are moderately lower.

  • Traders expect packers to pay at least steady prices for cash cattle this week. Showlist estimates are down and snow and ice in areas of the western Corn Belt and the Central and Northern Plains could disrupt transportation. But traders aren't willing to add long positions ahead of cash trade.
  • There are also concerns with the boxed beef market. While boxed beef prices improved yesterday, movement remained light at 132 loads.
  • April live cattle are still at a discount to last week's mostly $128 cash trade, which is limiting selling interest in nearby contracts.
  • But deferred contracts are being pressured by uncertainty about how consumers will respond to higher beef prices.

 

Lean hog futures gapped higher on the open and are enjoying slight gains.

  • Ideas pork demand will soon improve are giving the lean hog market a boost today.
  • Yesterday in the mandatory reported market the pork cutout value rose $1.09 on movement of 382.9 loads. The voluntary market showed the pork cutout value down 3 cents on very light movement of 15 loads.
  • For the week ended April 6, average hog weights in southern Minnesota and Iowa rose by 1 pound.
  • But wintry weather in parts of the northwest Corn Belt and the Northern Plains could disrupt transportation. This has also caused some power outages in these regions, which led to the cancellation of a first shift operations at at least one plant.
  • But packers are toeing the line on cash hog bids as most are dealing with negative margins.
     
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