Market Snapshot, 8:30 am CT (VIP) -- March 18, 2013

March 18, 2013 03:42 AM
 

Investors have a risk-off attitude to start the week amid concerns with a Cyprus bailout agreement that will tax bank deposits. Given the macro-economic concerns, risky assets such as commodities and the stock market are under pressure, while the U.S. dollar is higher.

 

Corn futures continue to trade mostly 2 to 5 cents lower.

  • Like most risky assets, the corn market is under pressure amid a risk-off movement to start the week as traders react to the Cyprus bailout deal. A stronger U.S. dollar is a concern for corn given already sluggish export demand.
  • Given recent corrective gains in old-crop corn futures, the market is at risk of a fresh wave of selling amid the negative outside markets.
  • Additional pressure is coming from a weakening of Gulf basis. Bids for spot delivery are steady, but April and July delivery are slightly lower this morning.

 

Soybean futures continue to trade mostly 10 to 15 cents lower on pressure from outside markets and expectations export demand for U.S. soybeans will dry up soon.

  • A broad-based, risk-off attitude is weighing on soybean futures as investors react to the Cyprus bailout deal that was tentatively reached over the weekend.
  • Additional pressure is coming from expectations the export of Brazilian soybeans will pick up soon and limit demand for U.S. soybeans. While the start of the Brazilian shipping season has been slowed, the record crop means there will be a long tail.
  • Also, central Argentina avoided a killing freeze over the weekend. That means the crop will have more time to fill pods.
  • Gulf soybean basis is mostly steady this morning.

 

Wheat futures are 4 to 8 cents lower in Chicago, 2 to 7 cents lower in Kansas City and 3 to 5 cents lower in Minneapolis.

  • Negative outside markets are weighing on wheat futures as traders are taking a risk-off stance to start the week. The firming dollar is a concern as it could derail the recent pick up in export demand for U.S. wheat.
  • Additional pressure is coming from the recent increase in precip across the Plains, which is giving the HRW crop a boost as it greens up. The crop will need more timely precip through spring, but crop concerns have eased for now.
  • Following the recent price bounce, wheat futures are at risk of fresh selling pressure, especially if the risk-off attitude becomes strong.

 

Live and feeder cattle futures are expected to open with a mixed tone.

  • Negative outside markets will weigh on live cattle futures this morning. But that may be countered by ideas the downside was overdone with Friday's sharp selloff. As a result, choppy price action is likely with neither bulls nor bears expected to take a strong stance.
  • Demand concerns continue to linger, which limits the upside in live cattle futures to corrective buying. Boxed beef movement was sluggish last week and there are concerns boxed beef prices are in the process of topping.
  • In feeder cattle, bears have technical momentum and there are concerns about demand for cash feeder cattle. But pressure on futures should be limited by weakness in corn today.

 

Lean hog futures are seen opening with a mixed tone.

  • Negative outside markets and demand concerns are expected to weigh on lean hog futures this morning. But ideas the downside has been overdone on the sharp price drop may limit selling interest and could encourage some short-covering.
  • Cash hog bids are expected to open the week steady to weaker as packers are bought ahead on slaughter needs. Packers are focused on trying to improve tight margins.
  • Traders are taking a prove-it attitude when it comes to the start of a seasonal rally in the cash hog market and in lean hog futures.
     
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