Market Snapshot, 10:00 am CT (VIP) -- March 28, 2014

March 28, 2014 04:59 AM


Corn futures have seen choppy trade this morning. Most contracts are currently 1 to 2 cents higher.

  • Lacking fresh news, traders are fully focused on readying positions ahead of the weekend and USDA's reports Monday.
  • Traders expect the agency to peg 2014 corn plantings around 92.748 million acres. This would be the lowest figure in three years and a 2.7% reduction from 2013.
  • But in recent years the Grain Stocks Report has been the biggest market mover. Traders expect USDA to peg March 1 corn stocks around 7.099 billion bushels. But there is much uncertainty about this figure considering the rebound in exports and expected reductions in feed demand due to PEDV outbreak in hogs and tight cattle supplies.
  • Meanwhile, reports Russian troops are massing at Ukraine's border is an underlying source of support as traders continue to believe this could eventually disrupt grain shipments.
  • Late yesterday the market learned the Buenos Aires Grain Exchange pegged the Argentine 2013-14 corn crop at 24 MMT, down 500,000 MT from its previous update. The nation's ag ministry, on the other hand, pegged the nation's corn crop at 29.8 MMT.

Soybean futures have seen two-sided trade this morning, with most contracts currently 1 to 3 cents lower.

  • Traders are squarely focused on evening positions ahead of USDA reports.
  • Gains are being limited by expectations for USDA to peg soybean plantings at 81.075 million acres, which would be a 4.5-million increase over 2013 and, if realized, a record.
  • On the other hand, March 1 soybean stocks are expected to come in at a tight 989 million bushels.
  • Late yesterday, Argentina's ag ministry said it expects a record-large soybean crop for the nation of 54 MMT.
  • Gulf basis slid 7 cents for immediate delivery and 2 cents for April delivery this morning, possibly signaling increased farmer sales and/or slower demand.

Wheat futures have extended overnight losses to post losses in the mid- to upper teens across all three flavors.

  • Early profit-taking pressure triggered sell stops. The forecast for rain in some areas of the Southern Plains is weighing on the market. However, the forecast is for warm, windy conditions in the south-central U.S.
  • Traders are also focused on evening positions ahead of Monday's key reports. Traders expect winter wheat acreage to come in around 42.157 million, down from 43.090 million in 2013. Spring wheat acreage is expected at 12.27 million, up 674,000 acres from last year.
  • March 1 wheat stocks are expected to be down 193 million bu. from year-ago at 1.042 billion bushels.

Live cattle futures are off to a slightly lower start. Feeder cattle futures are slightly to moderately lower.

  • Traders are engaging in some light profit-taking to wrap up the week as both live and feeder cattle futures are working on solid weekly gains.
  • However, early pressure has been seen as a value buying opportunity in recent sessions as futures remains well below this week's mostly $152 to $154 cash cattle trade, with some sales at $150. Trade at $152 in Kansas was a record high.
  • Adding to the negative tone are some signs beef prices may have put in a top. Choice beef values slipped $2.51 yesterday and Select declined $2.10. Movement improved to 147 loads, though this is still far from impressive.
  • This drop pulled packer profit margins back into the red. Traders say this will make them unwilling to pay steady to higher cash prices next week.
  • The 15-cut average grocery price for all beef cuts rose 7 cents this week to $4.99 per lb., according to a survey by the Wall Street Journal. That is up 60 cents from year-ago and sharply above pork and chicken prices.

Lean hog futures are mixed in a quietly traded session.

  • Lean hog futures are seeing a mix of mild followthrough buys and light profit-taking after a limit-higher close for most contracts yesterday.
  • Trading interest has been fairly limited ahead of this afternoon's post-market-close release of the 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. Traders expect the report to reflect the porcine epidemic diarrhea virus (PEDV) outbreak.
  • The National Animal Health Laboratory Network says 266 new cases of PEDV were confirmed the week ended March 22, bringing the total to 5,017 cases. This includes a five-case downward revision to last week's tally.
  • Meanwhile, the cash hog index continues to climb and early cash hog bids are steady to higher. April lean hogs are around $2.50 below the cash index.
  • Gains are being limited by a $1.24 slide in the pork cutout value that failed to spur strong buying interest. There are some concerns that lofty pork prices may have consumers increasingly turning to chicken for their protein needs.
  • China started stockpiling pork to lift hog prices since the hog:corn ratio dipped below breakeven.
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