Market Snapshot, 8:30 am CT (VIP) -- March 5, 2013

March 5, 2013 02:48 AM
 

Corn futures are mixed, with old-crop 1 to 2 cents higher and new-crop contracts narrowly mixed.

  • Bull spreading continues to dominate price action in the corn market, with nearby contracts leading gains amid concerns about tight supplies.
  • 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.
  • A weaker U.S. dollar index is promoting widespread buying in the commodity sector this morning.

 

March through September soybean futures are 7 to 15 cents higher, with new-crop contracts 3 to 5 cents higher.

  • Bull spreading is also dominating price action in the soybean pit with traders reacting to fresh demand news from USDA.
  • USDA announced soybean sales of 345,000 MT to China for 2013-14 and 330,000 MT to an unknown destination for 2012-13.
  • Additional old-crop soybean sales keep shipping slowdowns at Brazilian ports front-and-center on traders' minds, as the U.S. remains the most reliable supplier of soybeans.
  • The longer the window of opportunity for U.S. soybean exports remains open, the longer the tail on the Brazilian soybean shipping season. This is promoting bull spreading.
  • 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 are favoring a modestly higher tone in mixed trade.

  • Wheat is seeing a light boost from short-covering and spillover support.
  • Nearby Chicago wheat futures are trading at a discount to nearby corn futures due to tight available feed supplies. History suggests this spread inversion won't last long, but wheat is clearly in a follower's role.
  • Buying in wheat is being limited by by recent moisture improvements across the Plains and a lack of fresh demand news.
  • 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 called steady to firmer on strengthening boxed beef values.

  • Sharp gains in the boxed beef market to start the week strongly suggest a near-term low has been posted and is supportive for futures this morning.
  • Choice values rose $2.86 to approach $191-per-cwt. and Select rose $2.27 to rise above $188-per-cwt. Movement was light at 112 loads, but traders will want to see movement improvement or fear beef prices have risen too far too fast.
  • This week's cattle showlist is smaller than last week in the Southern Plains and weather-related stress on feedlots could cause packers to come to the cash market sooner rather than later in the week.
  • Cattle futures are also expected to see a boost this morning from strength in the U.S. stock market, as the Dow hit a new high.

 

Lean hog futures are called mixed on the possibility of short-covering and spillover from live cattle.

  • A more positive risk-taking atmosphere is expected to limit pressure on lean hog futures this morning and promote short-covering.
  • Also supportive is the firmer start to the week in the pork cutout market. The pork cutout value was 62 cents higher yesterday, but movement was slow at just 31.08 loads.
  • Futures are also overdue for a bounce to correct the severely oversold condition of the market.
  • But limiting buying will be lackluster demand by packers. Despite another round of snow slowing travel across the Midwest this morning, the cash market is expected to be steady to weaker.
     
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