Market Snapshot, 10:00 am CT (VIP) -- March 3, 2014

March 3, 2014 04:08 AM
 

Corn futures are mostly 4 to 12 cents higher with old-crop contracts leading gains.

  • The threat of military activity in Ukraine has lifted the market this morning, as this could slow grain exports from the world's No. 3 corn exporter.
  • In February, Ukraine's grain exports rose 1.3% to 2.82 MMT, according to the nation's ag ministry. For the first three days of March the nation exported 340,000 MT of grain, the ministry added.
  • Corn futures are also benefiting from reminders of already strong export demand.
  • USDA announced Japan purchased 211,500 MT of U.S. corn -- 47,000 MT for 2013-14 and 164,500 MT for 2014-15. The department also announced South Korea bought 140,000 MT of old-crop U.S. corn.
  • This follows daily sales announcements totaling 487,680 MT last week.
  • Traders expect this morning's export inspections report to confirm strong demand.
  • Gulf basis is steady this morning.

 

Soybean futures are enjoying gains of 6 to 10 cents in old-crop contracts; new-crop beans are roughly 4 to 5 cents higher.

  • Attitudes are bullish in the soybean market as the market remains in a solidly uptrending path. Adding to bullish attitudes are strong gains in the wheat and corn market.
  • Also supportive is news China's Ministry of Commerce modestly raised its forecast of the country's soybean imports for February from 5 MMT to 5.05 MMT. However, it also expects imports to drop to 3.49 MMT in March.
  • Weak economic data out of China is being overshadowed by rising tensions in Ukraine and Russia, though that's a corn/wheat factor.
  • Meanwhile, the market remains supported by logistical troubles in Brazil that have kept the export window open for the U.S. longer than anticipated.
  • Gulf soybean basis jumped 5 cents for immediate delivery this morning, while other months held steady. This signals export demand for U.S. beans remains strong.

 

SRW and HRW wheat futures are mostly 30- to 40-plus cents higher while HRS is seeing gains in the 30s in most contracts.

  • Concerns about the possibility of military action in Ukraine are supporting the grain complex this morning, as the nation is a major exporters of both corn and wheat, and conflict in the region may slow its exports.
  • In addition, bitter cold is raising concerns about the possibility of winterkill in some areas of Nebraska and Kansas where snowcover is lacking.
  • Meanwhile in the Southern Plains, precip chances remain limited, keeping dryness concerns in mind as spring emergence nears.
  • March SRW wheat futures saw buy stops triggered on the gap-higher start through the $6.00 resistance area. The same can be said for the HRW market's move through $7.00.

 

Live cattle futures are narrowly mixed this morning. Feeder cattle futures are moderately to sharply lower.

  • Strength in the U.S. dollar index is encouraging some mild profit-taking in the cattle market today.
  • But with April futures at more than a $5 discount to last week's record-setting cash cattle trade in the Southern Plains at $150 and even farther below trade at $152 in Nebraska (also a record), additional selling interest is limited.
  • The boxed beef market continues to surge. On Friday, Choice cuts surged $3.92 and Select gained $4.12. However, the price gains have slowed movement, raising some concern a top may be near.
  • These price gains have notably improved packer profit margins, though they remain in the red.
  • Another week of frigid temperatures will again slow cattle weight gain, further tightening supplies that are already at low levels. Traders will await this week's showlist estimates before they form cash opinions.
  • Strength in the corn market and U.S. dollar index are weighing on feeder cattle futures.

 

April lean hogs gapped higher and traded more than $2.50 higher in early trade, but the contract has since set back to trade around $2.10 higher. Deferred contracts are now narrowly mixed.

  • Pork and cash market strength are propelling the front-month contract. The move to new all-time highs for April lean hogs triggered buy stops.
  • The pork cutout value rose another $2.26 Friday, though movement slowed to 272.44 loads. The pork market should continue to benefit from high beef prices.
  • Product market gains have kept packer profit margins in the black, despite the fact that poor road conditions and chilly temps for much of the first two months of the year have kept the cash market steady to higher.
  • Most packers are paying up for supplies again today as bitter cold is making producers unwilling to market hogs.
  • Meanwhile, the porcine epidemic diarrhea virus (PEDV) remains an underlying source of support as there is uncertainty about just how much the virus will tighten supplies.
  • There are some concerns that tensions between the U.S. and Russia due to the situation in Ukraine could derail plans for Russia to resume importing U.S. pork that is free of ractopamine.
     
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