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

April 10, 2014 05:00 AM
 

Corn futures are posting losses around 2 to 3 cents in most contracts.

  • The front-month has not strayed far from the key $5.00 mark today. A major move away from this level would likely set the the tone for the next major move.
  • While yesterday's 2013-14 carryover estimate from USDA was lighter than expected, traders say this was largely factored into prices.
  • Traders are having a quiet reaction to this morning's export sales report that noted sales of 658,700 MT for 2013-14 and 58,000 MT for 2014-15. The overall tally met expectations, but strong demand is no longer "news." Exports of more than 1.217 were also strong.
  • Brazil's Conab made a minor revision to the country's corn crop, pegging it at 75.46 MMT versus 75.18 MMT in March.

 

Soybean futures are 3 to 6 cents lower in old-crop contracts while new crop are roughly 3 to 5 cents lower.

  • Soybeans are seeing profit-taking today after recent strong gains.
  • Adding pressure are reports China has defaulted on at least 500,000 MT of soybean shipments from the U.S. and Brazil as importing companies have been unable to secure credit due to poor crush margins.
  • Also, while China's trade data improved in March, significant declines in the nation's exports and imports keep concerns about the nation's economy close at hand.
  • Also today, Brazil's Conab has raised its soybean production peg by 700,000 MT to 86.1 MMT after slashing the estimate last month due to drought.
  • Also, an as-expected Weekly Export Sales Report showing sales of 79,100 MT for 2013-14 and 210,400 MT for 2014-15 gave bulls little to get excited about.
  • Exports of 700,400 MT were up 6% from the week prior, with China as the lead recipient. Still-strong shipments are impressive considering we are well past the point where the U.S. export window was expected to be close.
  • Traders are not overly concerned about the start of a 24-hour strike by port workers and truck drivers at the Rosario grain port in Argentina today. Such events are commonplace in the region.

 

After seeing some two-sided trade overnight, wheat futures are back to posting losses mostly around 3 to 6 cents in nearby contracts of all three flavors.

  • The rally in wheat has clearly run its course and traders therefore continue to book profits, contributing to the downtrend.
  • Also, an as-expected Supply & Demand Report from USDA followed by an export sales report that fell short of expectations today gives bulls little to get excited about.
  • Export sales of 41,800 MT for 2013-14 (a marketing year low) and 349,100 MT for 2014-15 fell short of expectations and week-ago.
  • The market is also showing a limited response to this morning's drought monitor that showed further deterioration in the Oklahoma/Texas panhandle area. Drought and its impact on winter wheat are considered factored into prices for the time being.

 

Live and feeder cattle futures are slightly to moderately lower this morning.

  • Traders are booking some profits as they wait for cash cattle trade to begin. They believe the cash market has put in a near-term top and therefore are comfortable with nearby contracts more than $4 below the low end of last week's cash cattle trade at $148 to $150.
  • Cash cattle bids remain at $146, while asking prices are around $150.
  • The boxed beef market has generally trended lower this week, packers are dealing with deeply negative cutting margins and cattle supplies are a bit more readily available this week. All of this points to lower trade.
  • On the other hand, a 242-load surge in beef movement on a $1.53 pullback in Choice values and a $1.74 decline in Select values signals beef prices may be nearing value levels. Retailers are likely using the price break to stock up on beef for grilling season.
  • Traders are brushing off strong export sales of 18,500 MT the week ended April 3. The tally marked a marketing year high.
  • Traders in the feeder cattle market are taking advantage of yesterday's solid gains by booking some profits.

 

Lean hog futures are slightly higher in the front-month and the August contract. Other months are slightly to sharply lower.

  • While the front-month continues to benefit from the wide discount it holds to the cash hog index with its expiration looming Monday, most deferred contracts are facing profit-taking.
  • Lean hogs posted impressive gains yesterday and the cash hog market (as well as futures) has given some signs a top is in place. This along with mild dollar strength is encouraging profit-taking.
  • Packers have lowered cash hog bids this week as heavier hog weights are helping to offset some of the impact of the porcine epidemic diarrhea virus (PEDV). Packers have also reduced kill hours in response to PEDV.
  • Plus, margins have chopped on either side of unchanged this week, tempering demand for cash hogs.
  • The front-month is benefiting from a surge in movement to 506.93 loads yesterday on a $3.14 slide in the pork cutout value. This signals the product market may be nearing value levels.
  • On the other hand, USDA's latest export sales update raised export demand concerns. Weekly pork sales of 4,200 MT were a marketing year low.
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