Market Snapshot, 10:00 am CT (VIP) -- March 21, 2013

March 21, 2013 05:07 AM
 

Corn futures have improved to trade a penny lower in old-crop futures and around a penny higher in new-crop.

  • Dollar strength is encouraging profit-taking in old-crop corn futures today after the market's recent rally.
  • But traders were also encouraged to engage in some short-covering after the May contract respected support at the 200-day moving average.
  • This morning's Weekly Export Sales Report reminded traders of generally tepid export demand. Sales of 92,200 MT for 2012-13 and 183,300 MT for 2013-14 fell short of expectations.
  • Also, softer Gulf basis levels for near-term delivery signals the recent rally may have encouraged farmer selling.

 

Soybean futures firmed with the open of pit trading to post double-digit gains in old-crop futures, with new crop beans up 3 to 9 cents.

  • Ideas the downside has been overdone recently, considering tight U.S. bean supplies, is encouraging light short-covering today.
  • Logistic problems in Brazil have kept the U.S. export window open longer than usual, drawing down already tight carryover stocks. Gulf basis firmed 2 to 3 cents for near-term delivery this morning, signaling more demand news may lie ahead.
  • Countering this, however, is this morning's disappointing weekly export sales of 107,800 MT for 2012-13 and 234,000 MT for 2013-14, which was a marked slowdown from recent weeks.
  • Also today, the market learned that China plans to sell between 1 MMT and 1.5 MMT of state soybean reserves to crushers due to shipping delays in Brazil.
  • While this could eventually translate to additional Chinese bean buys from the U.S. or South America to replenish stocks, it will likely limit crushers' urgency to book export supplies over the near-term.
  • Brazil's soybean harvest is thought to be about half complete while harvest in Argentina is getting underway.

 

Wheat futures are mostly 4 to 5 cents lower at all three locations.

  • Spillover from the corn market and negative outside markets is encouraging profit-taking in wheat futures today.
  • Plus, weekly export sales of 484,500 MT for 2012-13 and 88,800 MT for 2013-14 fell well short of lofty expectations. This also heightens concerns that dollar strength will limit wheat's attractiveness on the global export market.
  • Precip is expected in winter wheat country over the next few days, which is also encouraging profit-taking.
  • Countering this, however, are far less favorable 30- and 90-day weather forecasts relative to drought relief.
  • Also, Ukraine's head state weather forecaster expects Ukraine's winter wheat production to total 18 MMT to 19.5 MMT, which is up notably from 14 MMT in 2012.

 

Live cattle futures are off to a narrowly mixed start. Feeder cattle futures are slightly higher in most contracts.

  • Live cattle futures are enjoying some light followthrough buys this morning.
  • Just light cash cattle trade has occurred in most locations this week at $124 to $125. The front-month contract is above those cash prices, which is also encouraging some light profit-taking.
  • Also, Choice and Select boxed beef values fell yesterday, though movement improved. This signals additional cash trade will likely also occur at prices below week-ago.
  • Chilly temps are expected to spread across the U.S. next week, which puts a damper on hopes spring grilling will boost beef demand soon.
  • On the other hand, the market is relieved that meat inspector furloughs will be avoided.
  • Traders in the feeder cattle market are benefiting from favorably lower corn prices and ideas the downside has been overdone.

 

Lean hog futures are narrowly mixed, with most contracts favoring the downside.

  • A $1.68 drop in the pork cutout market yesterday is stirring concerns about pork demand and took a bite out of packers' profit margins.
  • This along with the fact that most packers are well supplied for near-term needs has resulted in steady to lower cash hog bids today. Plus, some plants will be closed next Friday, limiting their needs for next week.
  • A forecast for below-normal temps across the U.S. next week is adding to demand concerns as this could deter grilling.
  • Outside markets are also negative as the U.S. dollar index is firmer and the stock market and crude oil futures are under pressure.
  • But ideas the downside has been overdone is limiting pressure.
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