Market Snapshot, 8:30 am CT (VIP) -- April 1, 2013

April 1, 2013 03:42 AM
 

Old-crop corn futures have trimmed early losses to trade around 29 cents lower, with September around 4 cents lower. New-crop futures are now posting slight gains.

  • Old-crop corn futures gapped sharply lower overnight but have moved off session lows to suggest some "value" buying has entered the market.
  • New-crop futures have also moved off session lows and have turned mixed as traders recognize the market still has its work cut out to buy acres for this spring.
  • But it will be difficult for market bulls to regain momentum after USDA shocked the market with its Grain Stocks Report last Thursday that signaled supplies were not as tight as feared.
  • Export sources report that Japan has priced more than 500,000 MT of corn and is seeking another 200,000 MT to take advantage of the recent price decline. There is also talk that South Korea plans to buy 1.1 MMT of optional-origin corn.
  • Confirmation of fresh export business would help to rebuild a base of price support.

 

Soybean futures came off session lows as corn trimmed initial losses. Old-crop soybeans are now 7 to 10 cents lower and new-crop futures are mostly 1 to 3 cents higher.

  • Soybean futures saw followthrough selling in overnight trade to build on Thursday's sharp losses, but have moved off session lows.
  • But traders still have Thursday's bearish Grain Stocks Report on their minds, which is limiting buying to short-covering.
  • Traders are also digesting news China's official purchasing managers' index (PMI) that rose to an 11-month high of 50.9 in March, but that was below expectations.
  • May soybean futures have moved to its lowest level since mid-December, but the contract is now pivoting around Thursday's low of $13.97.

 

Nearby wheat futures are 2 to 5 cents lower on spillover from neighboring pits, but the market hasn't been sharply influenced by corn yet today.

  • While wheat is seeing spillover from corn futures, the market isn't seeing a sharp move as traders are working to correct spreads.
  • May Chicago wheat futures are trading at around a 16-cent premium to May corn futures. Look for the spread to continue to correct as the stocks report signaled there will be "enough" corn left at the end of the marketing year to provide a cushion for the upcoming season.
  • Traders did a good job of anticipating Thursday's all wheat acreage projection, but the higher-than-expected wheat stocks estimate is limiting buying.
  • Traders are anxiously awaiting the national Crop Progress Report this afternoon. The market will now get a weekly update on the winter wheat crop to help direct prices.

 

Live cattle futures are called mixed on a combination of followthrough buying and profit-taking.

  • Last week's late sharp move higher in live and feeder cattle futures signals those markets have posted near-term lows. But to confirm that, cattle futures need to benefit from followthrough buying this morning.
  • Feeder cattle futures should particularly enjoy short-covering this morning in light of ongoing heavy pressure in the corn market.
  • But the key to building on last week's gains in live cattle futures will be whether or not the boxed beef market continues to improve. Improved boxed beef movement last week signals retailers have begun purchasing for grilling season features.

 

Lean hog futures are called steady to lower based on a slightly negative Quarterly Hogs & Pigs Report.

  • Thursday's Hogs & Pigs Report showed most categories within expectations, but the "misses" were negative, giving the report a slightly bearish read.
  • Specifically, the Kept for Marketing category at 102% of year-ago signals more hogs will be coming through the pipeline this year, which is especially negative for deferred futures.
  • April lean hog futures rallied into the H&P Report and ended last week at around a $5 premium to the cash index. This opens significant near-term downside risk for the market unless the cash market firms.
  • But firmer cash trade is unlikely since packers' profit margins slipped into the red late last week. As a result, the cash hog market is called steady to $1 lower this morning.
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