Market Snapshot, 10:00 am CT (VIP) -- March 5, 2013

March 5, 2013 04:03 AM
 

Corn futures are extending earlier gains. Old-crop contracts are now 6 to 9 cents higher, with new-crop contracts mostly 2 to 4 cents higher.

  • Old-crop contracts are leading gains amid tight supplies and some signs fresh demand news may be on the horizon.
  • Gulf corn basis is 5 cents higher for March and April shipment to stand 74 to 75 cents above May futures. Meanwhile, basis for deferred shipment is mixed.
  • Buying interest in new-crop contracts remains limited to mild short-covering as recent heavy precip across the Midwest will help the moisture situation.

 

March through August soybean futures are now 14 to 19 cents higher, with new-crop contracts mostly 8 to 10 cents higher.

  • Strong demand for U.S. soybeans is fueling buying interest again this morning. USDA announced soybean sales of 345,000 MT to China for 2013-14 and 330,000 MT to an unknown destination for 2012-13.
  • Shipping delays at Brazilian ports are keeping the export window for U.S. soybeans open longer than anticipated. As long as exporters continue to sell U.S. soybeans, there's more near-term upside potential. But the record Brazilian crop will eventually hit the world market, meaning price strength is likely to be short-lived.
  • Traders are also beginning to more actively even positions ahead of Friday's Supply & Demand Report, in which they expect USDA to slightly trim carryover due to strong demand.

 

Wheat futures have firmed to trade slightly higher at all three exchanges.

  • Wheat is being supported by short-covering amid ideas the downside has been overdone. Spillover support from corn and soybeans is also supportive.
  • The discount nearby Chicago wheat futures hold to old-crop corn futures means the wheat market should follow corn higher if recent corrective buying in corn continues.
  • But buying interest is being limited by recent moisture improvements across the Plains. Recent snowfall is melting as temps warm and southern areas of the region are in line for some rains late this week.
  • Also, ABARES says it expects Australian wheat production to increase 13% in 2013-14, but for Australian wheat exports to decline by 5% from this season. This signals more opportunities ahead for U.S. wheat exports.

 

Live cattle futures are mixed after a firmer start. Feeder cattle futures are mixed.

  • Live cattle futures are being mildly supported by strength in boxed beef prices to open the week. But while prices were sharply higher, movement was light, which is limiting traders' willingness to buy.
  • April live cattle futures are trading at a slight premium to last week's $128 cash cattle prices in the Plains. But given recent inclement weather in the Plains and Midwest, and tightening cattle supplies, the premium is very modest, suggesting traders remain apprehensive about demand.
  • Cattle traders and feedlots are hoping for firmer cash cattle prices this week, but are likely to remain cautious until higher prices are confirmed.
  • March and April feeder cattle futures are mildly higher on support from live cattle. Deferred contracts are modestly lower given strength in corn.

 

Lean hog futures are choppy with a slight upside bias.

  • Most lean hog futures contracts are getting a modest boost from light short-covering given the heavily oversold condition of the market.
  • But traders remain concerned with demand. Until those concerns are eased, more than a modest corrective bounce will be had to come by.
  • Cash hog bids are steady at most locations, although cash sources are signaling some firmer bids in eastern locations.
     
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