Market Snapshot, 10:00 am CT (VIP) -- March 27, 2014

March 27, 2014 05:02 AM

Corn futures are 3 to 6 cents higher in most contracts.

  • Traders are responding positively to impressive weekly export sales of more than 1.408 MMT for 2013-14 and 28,400 MT for 2014-15, which topped expectations by a wide margins. Egypt, a value buyer, was the lead purchaser.
  • Also of note, export commitments for 2013-14 are running 166% ahead of year-ago, while USDA projects old-crop exports will surpass year-ago by 122.3%. This signals some adjustments to USDA's export projection may be warranted.
  • Exports of 1.23 MMT were also impressive and up 29% from the prior four-week average.
  • This impressive export demand data has pushed nearby contracts back to the upper end of the recent consolidated trading range. Thus far, traders have not tried for an upside breakout.
  • Traders are also readying for Monday's key USDA reports. Traders expect USDA to peg 2014 corn planted acreage around 92.748 million acres and for March 1 corn stocks around 7.099 billion bushels.
  • Meanwhile, Gulf basis is steady to 2 cents lower for near-term delivery this morning.

Soybean futures got off to a firmer start, but the market has since softened to mixed trade.

  • Soybean futures initially benefited from this morning's Weekly Export Sales Report as the overall tally came in more than double the upper end of pre-report expectations.
  • Weekly sales of 11,900 MT for 2013-14 are relatively low and included order cancellations of around 300,000 MT. But new-crop sales of 534,900 MT were strong and pushed the combined tally above expectations. China was the lead buyer of new-crop beans.
  • Traders are also encouraged by strong exports of 720,100 MT with China as the lead recipient. This signals the U.S. export window remains open longer than usual.
  • But buying enthusiasm is being tempered by anticipation of USDA's Prospective Plantings and Grain Stocks Report Monday.
  • Traders expect USDA to project 2014 soybean plantings around 80.075 million acres, up sharply from year-ago. But the Grain Stocks Report is expected to reflect tight March 1 stocks of around 989 million bushels.

Wheat futures have reversed course from overnight to trade roughly 4 to 6 cents higher in most contracts of all three flavors.

  • Rain yesterday on the Plains pressured the wheat markets overnight, but the return of mild, windy conditions on the Southern Plains today has given bulls an opportunity
  • Support also stems from this morning's weekly export sales data. Sales of 400,500 MT for 2013-14 and 327,500 MT for 2014-15 topped expectations.
  • Also, exports of 530,400 MT were up 21% from week-ago.
  • Traders are also readying from USDA's reports Monday. They expect USDA to project all wheat planted acreage at 56.277 million, up marginally from 2013. Spring wheat acreage is expected at 12.27 million, up from 11.60 million last year.
  • March 1 wheat stocks are expected to be tighter than year-ago at 1.042 billion bushels.
  • Buying is being somewhat tempered by Egypt's goal to cut its wheat imports by 1 MMT to 1.5 MMT next year.

Live cattle futures got off to a choppy start, but most contracts are currently slightly lower. Feeder cattle futures are split with nearbys slightly firmer and deferreds posting similar losses.

  • Trade in the live cattle market has been choppy this week amid uncertainty regarding near-term price direction.
  • On one hand, nearby contracts remain well below cash cattle trade at mostly $152 on the Southern Plains this week, with northern locations seeing trade at $154.
  • But a lack of urgency to narrrow this gap signals traders believe a downside correction in the cash market is ahead. Packer profit margins are slightly in the black.
  • Traders point to the latest Cattle on Feed Report that indicates third quarter supplies will be more ample than originally thought. However, this is a ways off.
  • Light support stems from improved beef movement on mixed prices yesterday. Both cuts of meat remain historically strong in terms of prices.
  • Beef export sales the week ended March 20 were solid at 13,300 MT for 2014, though a 100 MT net sales reduction was noted for 2015.
  • Nearby feeder cattle are enjoying some mild followthrough buys after yesterday's gains. The market's chart posture clearly favors market bulls.

Lean hog futures are sharply higher after a gap-higher start.

  • Once again, traders responded to a downside move with renewed buying interest. However, increased volatility in recent sessions could signal a top is near. Today's close could be quite telling as to near-term price direction.
  • Cash hog bids are mostly steady as thinner margins have made packers more cautious about raising bids.
  • The pork cutout value firmed 76 cents yesterday on strong gains in picnics and bellies. Movement also picked up to 370.97 loads.
  • Traders are also beginning to ready for USDA's Quarterly Hogs & Pigs Report. Traders look for the report to show All Hogs & Pigs at 94.5%, Kept for Breeding at 99.6% and Kept for Marketing at 94.0% of year-ago levels.
  • There has also been some talk the H&P Report will not reflect the full impact of the porcine epidemic diarrhea virus since the number of confirmed PEDV cases has surged since the survey was issued in December.
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