Market Snapshot, 10:00 am CT (VIP) -- April 2, 2013

April 2, 2013 05:12 AM
 

Corn futures have softened to trade just slightly higher in old-crop contracts, while new-crop futures are mildly favoring the downside.

  • Old-crop corn futures are benefiting from corrective short-covering amid ideas the nearly $1 price plunge of recent days will spark fresh demand. Plus, the recent price decline pulled corn futures into technically oversold territory according to the Relative Strength Index. But corrective buying interest is fading from earlier in the day.
  • Asian feed buyers are increasing their purchases. South Korean buyers purchased at least 130,000 MT of corn (likely South American origin) overnight.
  • Also supportive of this idea, Gulf basis firmed 3 cents for immediate delivery this morning and it was steady to 2 cents higher for other months.
  • News factory orders rose 3% in February, which was in line with expectations. This latest sign of economic improvement is boosting investor risk appetite this morning.

 

Soybean futures softened with the open of pit trading to trade slightly higher in old-crop contracts while new-crop futures are mostly 2 to 3 cents lower.

  • Traders are covering short positions in old-crop beans as they view the downside as overdone. The lack of heavy spillover from corn today is enabling this to occur.
  • There is also market chatter regarding China's supplies tightening due to port congestion in Brazil, which could result in some "fill-in" purchases from the U.S. until Brazilian supplies begin to flow more regularly.
  • Gulf soybean basis surged 11 cents for immediate delivery to stand 75 cents above May futures and basis was 2 cents higher for May and June delivery this morning. This suggests some fresh demand news may be coming soon.
  • New-crop beans, on the other hand, are facing some light profit-taking as production is expected to rebound in 2013. However, fewer acres are anticipated to be planted to beans this growing season based on USDA's March survey work.
  • Softening of crude oil futures is weighing on soyoil futures, which, in turn, is pressuring the rest of the soy complex.

 

Chicago wheat futures are roughly 6 to 12 cents higher, Kansas City is around 3 to 6 cents higher and Minneapolis is enjoying double-digit gains.

  • Wheat futures are enjoying short-covering this morning on ideas the downside has been overdone.
  • Emphasizing this idea was the start of weekly crop condition ratings from USDA yesterday that revealed the HRW and SRW ratings have worsened since the crops entered dormancy.
  • But upside is being limited by heavy precip in the Southern Plains today. Much more will be needed to improve the condition of the crop, however, especially considering forecasts for above-normal temps in the next few weeks.
  • Outside markets are mixed. The U.S. dollar index is higher on euro-zone concerns, while the stock market are firmer on positive U.S. economic data.

 

Live cattle futures got off to a slightly higher start, but futures have since softened to mixed trade. Feeder cattle futures are posting slight to moderate losses.

  • Traders are engaging in cautious position evening today as they evaluate cash cattle prospects this week.
  • Forecasts for above-normal temps nearly nationwide by week's end is boosting hopes grilling season is around the corner.
  • Yesterday, Choice boxed beef values improved $1.48 and Select declined 7 cents. But movement was relatively light at 143 loads. Prices and movement must improve to get traders to throw money at the long side of the market.
  • And while supplies are expected to tighten through 2013, this week's showlist is up from last week, which puts more pressure on the boxed beef market to improve.
  • Recent softer corn prices spurred a marked recovery in feeder cattle futures in recent sessions. Today, traders are taking advantage of those gains by booking some profits.

 

Lean hog futures are enjoying slight gains this morning.

  • Tighter hog supplies in the eastern Corn Belt are again giving the cash hog market a lift. Early bids are steady to $1 higher as packers buy additional loads for late-week kills.
  • But tight packer margins and concerns about pork demand could signal this rebound will be short-lived.
  • Yesterday, the pork cutout value posted a third consecutive day of gains, rising 75 cents. But this pared movement to just 11.25 loads.
  • Buying in nearby lean hog futures is also being limited by the hefty premium those contracts hold to the cash index.
     
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