Market Snapshot, 10:00 am CT (VIP) -- March 31, 2014

March 31, 2014 05:06 AM
 

Corn futures have extended overnight losses to trade 9 to 14 cents lower in most contracts, with nearby contracts leading to the downside.

  • Corn futures have fallen back to the lower end of the market's month-long consolidation range. Any surprises from USDA's Grain Stocks or Prospective Plantings Report could help the market to break out of this range.
  • Pre-report expectations are for USDA to peg March 1 corn plantings around 92.748 million acres, which would be down 2.7% from 2013.
  • Traders expect USDA to peg March 1 corn stocks around 7.099 billion bu., which would be up 31.5% from 2013.
  • Gulf basis is down 1 to 3 cents for March through May delivery this morning, possibly signaling reduced demand.

 

Soybean futures have improved to trade mixed, with old-crop steady to a penny higher and new-crop 2 to 5 cents lower.

  • Some bull spreading has returned to the soybean market ahead of USDA's big data release today.
  • While USDA's quarterly soybean stocks are expected to come in around 989 million bu., clearly favoring market bulls, planting projections are expected to pressure new-crop futures. Traders expect USDA to project bean plantings at a record 81.075 million acres.
  • Gulf soybean basis is 2 to 4 cents lower for March through May delivery this morning, possibly signaling lower demand for U.S. soybeans amid stepped-up export competition from South America.
  • Pre-report expectations for this morning's export inspections report indicate traders expect inspections to decline from last week's tally.
  • AgRural lowered its Brazilian soybean production forecast by 300,000 MT to 85.6 MMT.

 

Wheat futures continue to see losses around 3 to 6 cents in most contracts, with HRS leading to the downside.

  • Traders are reducing risk ahead of USDA's Prospective Plantings and Quarterly Grain Stocks Reports today.
  • Traders expect all wheat plantings to come in around 56.277 million acres, with spring wheat plantings at 12.270 million and winter wheat plantings at 42.157 million acres.
  • 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.
  • Rain in the forecast for winter wheat country is adding pressure, though the driest areas of the region are expected to remain dry.
  • Tensions in the Black Sea region are also helping to limit selling.

 

Live cattle futures gapped lower on the open and are posting moderate losses. Feeder cattle futures are also posting moderate losses.

  • Friday's plunge in the boxed beef market is weighing heavily on futures as it helps to convince traders the product market has put in a short-term top. Choice beef plunged $4.79 and Select dropped $3.87. Movement did improve to 203 loads, however.
  • This plunge adds to ideas a top in the cash market may be in place after record-high trade in some regions last week at mostly $152 to $154.
  • Packers saw profit margins dip back into the red last week, adding to bearish attitudes toward the cash market.
  • Losses in live cattle and the lean hog market are weighing on feeder cattle futures.

 

April lean hogs are slightly lower, but other months gapped lower on the open and are posting sharp to limit losses.

  • Friday's Hogs & Pigs Report clearly favored market bears as categories came in on the bearish side of pre-report expectations. While the U.S. hog inventory was pegged at 97% of year-ago levels, the pre-report trade guess was for the figure to come in at 94.5% of year-ago levels.
  • A breakdown of the market hog weights suggests slaughter will run 3% to 4% below year-ago levels, which compares to the year-to-date pace that is 7% below 2013. This might suggest USDA did not catch all the losses from the porcine epidemic diarrhea virus (PEDV) in its latest report.
  • Meanwhile, pressure on the front-month contract is being limited by the $4 discount it holds to the cash hog index, which continues to climb.
  • Pressure on the front-month is also being limited by ongoing product market strength. On Friday the pork cutout value firmed 37 cents, though movement was again lackluster at 259.93 loads.
  • Cash hog bids are mostly steady with a few $1 lower cash hog prices today. Also, there is some talk that some Midwest pork plants are reducing hours of operation from five to four days a week due to shrinking supplies.
     
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