Market Snapshot, 10:00 a.m. CT (VIP) -- April 4, 2013

April 4, 2013 05:00 AM
 

Corn futures improved slightly with the open of pit trading, but the market has since settled back to trading 1 to 4 cents lower, with new-crop leading losses.

  • Strength in the U.S. dollar index and a lack of clear signals that the corn market has put in a technical low is encouraging profit-taking in corn futures today.
  • But downside risk is being limited by this morning's weekly export data which showed sales of 354,300 MT for 2012-13 and 33,000 MT for 2013-14. The tally met expectations and improved over week-ago.
  • Plus, this was for the week preceding the major price break in the futures market, supporting ideas next week's tally should be higher.
  • But sales of South American corn to South Korea and steady Gulf basis levels remind traders of demand destruction for U.S. corn this year.
  • Strength in the U.S. dollar index is also giving bears the advantage.

 

Soybean futures have softened to trade mostly 7 to 11 cents lower with old-crop beans leading losses.

  • Demand concerns and dollar strength are pressuring soybean futures today.
  • Traders are aware a large South American crop will eventually hit the market, slowing demand for U.S. beans.
  • This is overshadowing this morning's weekly export sales of 392,700 MT for 2012-13 and 355,100 MT for 2013-14, which topped expectations.
  • Adding to ideas demand will slow is the bird flu situation in China. The market is concerned the scare may reduce meat and poultry demand in China, and thus lessening crushing needs.
  • While weekly soymeal export sales met expectations at 92,600 MT for 2012-13 and 12,700 MT for 2013-14, a net sales reduction in soyoil export sales of 4,600 MT for 2012-13 was disappointing. However, the pace of exports for both products remains well above that needed to reach USDA's export sales projection for 2013-14.
  • Steady Gulf basis levels this morning signal no fresh demand news is imminent.

 

Wheat futures remain under pressure with Chicago and Minneapolis 6 to 7 cents lower while Kansas City is double-digit lower.

  • Wheat futures yesterday staged an impressive rally thanks to news China has bought up to 10 cargoes of U.S. wheat due to quality concerns with the Canadian crop.
  • Today, traders are taking advantage of that run-up and strength in the U.S. dollar index by booking profits.
  • A disappointing weekly wheat sales report this morning is also encouraging to that end. Sales of 141,200 MT for 2012-13 (a marketing-year low) and 174,800 MT for 2013-14 fell short of expectations and declined notably (76% for old-crop) from last week.
  • Helping to limit losses are ongoing concerns about the U.S. HRW wheat crop. This week's drought monitor showed only minor improvement in the Southern Plains.
  • However, significant precip is expected for the Central Plains next week.

 

Live cattle futures are posting moderate losses in all but the October contract, which is slightly higher. Feeder cattle futures are also under pressure.

  • Traders are evening positions as cash cattle trade is thought to be largely complete in Texas and Kansas after active trade at $128 yesterday -- within last week's price range and in line with nearby futures.
  • Uncertainty about beef demand is also encouraging mixed trade.
  • Boxed beef prices were mixed yesterday with Choice cuts 6 cents higher and Select down 61 cents. Movement did improve to 200 loads however. But in light of recent weakness in both prices and movement, traders are not convinced a low is in place.
  • Also adding to demand concerns, weekly beef export sales of 10,500 MT were down 39% from the previous week.
  • Feeder cattle futures softened as the corn market moved off its early lows.
  • Strength in the U.S. dollar index is limiting buying interest across the livestock sector.

 

Lean hog futures split amid some bull spreading activity with nearbys slightly higher and deferred contracts slightly lower.

  • Nearby contracts are benefiting from some light followthrough buying and recent cash market strength and signs of improvement from the pork market.
  • Today, cash hog bids are mostly steady, with a few scattered higher bids expected.
  • The forecast for warmer temps going forward raises hopes pork demand will improve, especially since pork is inexpensive relative to beef.
  • But yesterday the pork cutout value slid 11 cents on light movement of 32.38 loads for the voluntarily reported market. Mandatory reported prices rose $1.58 yesterday on movement of 393.4 loads.
  • Strength in the U.S. dollar index is weighing on deferred contracts as this diminishes the attractiveness of U.S. pork prices for exporters.
  • For the week ended March 28, USDA reports pork export sales of 48,400 MT, with Mexico the lead buyer.
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