Market Snapshot, 10:00 am CT (VIP) -- March 26, 2014

March 26, 2014 05:12 AM
 

Corn futures have turned narrowly mixed.

  • Mild profit-taking is weighing on the corn market today. But gains in soybeans helped the market move off its lows.
  • Traders in the corn market are increasingly focused on evening positions ahead of USDA's Prospective Plantings and Quarterly Grain Stocks Reports next Monday.
  • March 1 corn planting intentions are expected to come in at 92.748 million acres, which would be down 2.6 million acres from year-ago, but up 748,000 acres from USDA's projection at its Outlook Forum.
  • The Grain Stocks Report has been the major market-mover in the past. Traders look for stocks to come in around 7.099 billion bu., up from 5.4 billion bu. last year.
  • The forecast for warmer Midwest temps is also a source of pressure as this should help thaw frozen soils, though there's a long way to go on that front.
  • Pressure is being limited by news Lanworth expects planting delays to trim U.S. corn plantings slightly to 91.6 million acres. It also expects March 1 corn stocks to come in between 6.999 billion bu. and 7.376 billion bushels. It says the wide range is due to "unprecedented extremes in corn feed and residual use."
  • Weekly ethanol production fell 6,000 barrels per day (bpd) to 885,000 bpd the week ended March 21. Ethanol stocks rose 376,000 barrels to 15.65 million barrels.

 

Soybean futures have improved to trade fractionally to 3 cents higher in all but the lead-month May contract.

  • Early losses in the soybean market have triggered some value buying.
  • Traders remain encouraged by the fact China has yet to cancel major tonnage of U.S. soybean buys.
  • The market expects strong demand to be reflected by USDA's Quarterly Grain Stocks Report Monday, which traders expect to show quarterly stocks around 989 million bu., 10 million bu. below last year's tight level.
  • Lanworth expects March 1 soybean stocks to come in at even lower levels of around 940 million bushels.
  • Traders fully expect soybean acreage to increase for the 2014-15 growing season. Pre-report trade guesses show the market expects March 1 soybean planting intentions of 81.075 million acres, which would be up around 4.5 million acres from 2013.
  • Gulf basis firmed 4 cents for immediate delivery this morning, but April through June delivery slid 3 to 5 cents.

 

Wheat futures have extended early losses to trade 4 to 6 cents lower in the SRW market, while HRS wheat is 4 to 8 cents lower and HRW wheat is down 8 to 9 cents.

  • Profit-taking is weighing on the wheat complex today. Dollar strength adds pressure.
  • Rain is falling on the Southern Plains today and more light rain is in the near-term forecast. While precip totals are expected to be light, this is nevertheless easing crop concerns for the time being.
  • Traders are also beginning to more actively even positions ahead of Monday's Prospective Plantings and Quarterly Grain Stocks Reports.
  • According to pre-report expectations, traders look for spring wheat acreage of around 12.27 million, which represents a 674,000-acre increase from 2013. All wheat acreage of around 56.277 million is expected, which compares to 56.156 million in 2013.
  • Traders expect the Grain Stocks Report to reveal March 1 wheat stocks of around 1.042 billion bu., down from 1.235 billion bu. a year-ago.
  • Traders are brushing off Japan's marginal increase to its 2014-15 wheat for food import forecast.
  • Lanworth today said it expects persistent dry weather to lower 2014-15 wheat production in the EU, Kazakhstan, Russia, Ukraine and the U.S. by 5 MMT.

 

Live cattle futures gapped sharply higher on the open, but have trimmed gains. Most contracts are slightly to moderately higher. Feeder cattle futures are also slightly to moderately higher.

  • Live cattle gapped higher on the open as traders responded to cash cattle trade at mostly $2 higher prices of $152 in the Southern Plains and $154 in Nebraska yesterday. Even with today's solid gains, the front-month contract is around $7 below the low end of this range.
  • Higher cash cattle trade was spurred by boxed beef prices that are hovering near record levels as well as tight market-ready supplies.
  • However, the higher beef prices have kept movement on the light side, keeping demand concerns nearby.
  • Packer profit margins are back near breakeven.
  • Strength in live cattle along with tight calf supplies are fueling the positive tone in feeder cattle futures.

 

Lean hog futures are moderately to sharply lower this morning.

  • Followthrough selling is weighing on lean hogs today, as the market's move through uptrending support signals the rally has run its course -- for now.
  • Futures and the cash hog index has reversed places, with the April contract now $4.50 below the cash index.
  • Traders are also lightening their long exposure to the market ahead of Friday's Quarterly Hogs & Pigs Report. While it is expected to show All Hogs & Pigs at 94.5% of year-ago levels, losses caused by the porcine epidemic diarrhea virus (PEDV) have already been factored into prices.
  • Traders are ignoring much-improved movement of 397.1 loads of pork on a 6-cent rise in the pork cutout value yesterday.
  • Early cash hog bids are mixed as some plants are paying up for tight market-ready supplies while others have reduced kill hours due to supply shortages.
     
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