Market Snapshot, 10:00 am CT (VIP) -- March 13, 2013

March 13, 2013 05:14 AM
 

Corn futures softened with the open of pit trading to trade mostly 6 to 10 cents lower, with old-crop futures leading declines.

  • A strong dollar is also giving bears an edge this morning. Early buying interest eroded and fresh selling surfaced as the greenback moved to strong gains.
  • Traders are also unwinding bull spreads after putting them back on in recent sessions.
  • News an unknown destination bought 114,300 MT of grain sorghum for 2012-13 adds to talk end-users are seeking less pricey alternatives to U.S. corn, such as wheat or sorghum. This is easing concerns about tight carryover supplies for the time being.
  • Also adding pressure, U.S. ethanol production fell 1% last week to 797,000 barrels per day. Ethanol stocks declined 3.4% to 18.7 million barrels.
  • But Gulf corn basis firmed 3 cents for immediate delivery this morning.

 

Soybean futures have softened to trade mostly 20-plus cents lower in old-crop contracts and 8 to 10 cents lower in new-crop months.

  • Traders continue to unwind bull spreads. Traders are concerned that export demand for U.S. soy products will soon fade notably as South American supplies come available.
  • Traders are also unwinding long soybean/short corn spreads again today.
  • The dollar's strong rally since the start of February is also pressuring the market. The dollar is sharply higher this morning.
  • Plus, Gulf basis softened 5 cents for immediate delivery this morning.
  • Also, recent precip is seen as improving prospects for a rebound in production for the 2013-14 marketing year.

 

Wheat futures have softened slightly to trade roughly 6 to 5 cents lower at all three locations.

  • As selling in the corn market picked up, so did pressure on wheat futures. Dollar strength is encouraging to that end.
  • But pressure is limited as traders are also working to correct the spread nearby Chicago wheat futures hold to nearby corn contracts.
  • A reminder that Ukraine's grain crop is expected to recover to 55 MMT this year raises concerns about U.S. prices remaining competitive globally.
  • Meanwhile, the deputy minister for ag in Saskatchewan says Canadian officials are looking to increase exports into the Southeast Asian market.
  • Also, recent precip in the Central and Southern Plains is making it tough for wheat to find buyers, though much more is needed to relieve widespread drought.

 

Live cattle futures are enjoying slight gains. Feeder cattle futures are moderately to sharply higher.

  • Live cattle are enjoying followthrough buying after yesterday's higher close as traders are optimistic about ongoing strength in the boxed beef market.
  • Choice values rose another 40 cents to $197.28 and Select values continued their record-setting streak with a 10-cent increase to $195.70 yesterday. But movement was again light at 135 loads, which raises concerns about the sustainability of current prices.
  • Recent beef strength has pulled packer profit margins into the black, which could make them more willing to raise cash cattle bids this week. Last week, sales took place at mostly $128.
  • Traders are also optimistic that more consumers will fire up the grill as spring approaches.
  • While better-than-expected retail sales are positive for domestic demand as it signals consumer spending is holding up in the face of higher taxes and gas prices, the resulting dollar strength could trim export demand.
  • Feeder cattle futures are benefiting from corrective short-covering amid pressure on corn as well as weakness in the U.S. dollar index today.

 

Lean hog futures are off to a mixed start, with April slightly higher and deferred months under light pressure.

  • Weakness in the cash and product markets is putting light pressure on lean hog futures. Dollar strength is also encouraging traders to book some profits after gains yesterday.
  • The pork cutout value fell 43 cents yesterday, signaling it is still searching for a low. The softer price did encourage strong movement of 122.63 loads, however.
  • Softer pork prices have pulled packer cutting margins close to breakeven. Thus, they are keeping cash hog bids steady to lower today.
  • Also contributing to weak demand for cash hogs, average hog weights in Iowa and southern Minnesota rose 0.8 lb. the week ended March 9.
  • Hope that Easter ham buying and spring grilling will help the pork market to put in a low is supporting the front-month contract and limiting pressure on deferred futures.
  • Also, Chinese hog prices have fallen below breakeven. China's National Development and Reform Commission has therefore said it may take measures to prevent further declines, such as stockpiling pork for state reserves and encouraging producers to trim production.
     
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