Market Snapshot, 8:30 am CT (VIP) -- March 7, 2013

March 7, 2013 02:44 AM
 

Corn futures are favoring a weaker tone in narrowly mixed trade.

  • Following yesterday's sharp losses, price action has calmed (at least in overnight trade) as futures haven't strayed too far from unchanged.
  • Sharp weakness in the U.S. dollar index is helping to limit pressure in corn, as it is supporting crude oil and gold this morning.
  • But a disappointing weekly export sales report that showed net sales reductions of 49,800 MT for 2012-13 signals demand for old-crop corn has softened. Net sales of 206,500 MT for 2013-14 were led by increases to unknown destinations.
  • Gulf corn basis has softened by 3 cents for immediate delivery to reflect softening demand.

 

Soybean futures are mixed, with old-crop up 2 to 3 cents. Most new-crop futures are slightly lower.

  • Weakness in the U.S. dollar index and an impressive showing in the weekly export sales report is supporting old-crop soybean futures this morning.
  • The report showed sales of 392,000 MT for 2012-13 and sales of 990,600 MT for 2013-14 -- coming in above lofty expectations.
  • The report also showed exports of nearly 1.1 MMT. Export commitments are running 17% ahead of year-ago compared to 20% ahead last week. They are still running well ahead of USDA's projected pace of a 1.2% reduction from year-ago.
  • With the window of opportunity for U.S. soybean exports open longer than usual due to shipping delays in Brazil, traders look for USDA to raise its export projection slightly in tomorrow's Supply & Demand Report.

 

Wheat futures are firmer in corrective trade, with Minneapolis leading gains by trading 7 to 10 cents higher. Chicago and Kansas City are mostly 1 to 5 cents higher.

  • Weakness in the U.S. dollar index is attracting short-covering in the wheat market this morning following yesterday's sharp losses.
  • May Chicago wheat futures have returned to a premium to May corn futures thanks to yesterday's news that an Indiana ethanol plant was bidding for SRW wheat due to tight corn supplies. This is encouraging a correction of the wheat-corn spread.
  • This morning's weekly export sales report showed sales of 618,100 MT for 2012-13, which is a 66% improvement from last week. Sales of 210,000 MT for 2013-14 were also stronger than expected.
  • This morning's drought monitor reflected minor improvement across Kansas and Oklahoma and a slight expansion of the most extreme drought in Texas.

 

Following yesterday's moderate to sharp losses in live and feeder cattle futures, the market is due for a corrective bounce.

  • Live cattle futures did technical damage yesterday by building on the previous day's bearish reversals, although contracts came well off session lows into the close to suggest another round of short-covering is possible this morning.
  • Upside potential will be limited by concerns about domestic and export demand, but continued strength in the boxed beef market should also promote corrective buying.
  • Choice beef values have surged $10.52 in the last week and are now at $196.08. Movement was again relatively light at 142 loads yesterday.
  • Light cash cattle trade got underway at steady prices with the previous week at $128 yesterday, which was a disappointment given hopes for higher trade. Some feedlots are still holding out that hope and waiting to market animals.

 

Lean hog futures are expected to be firmer this morning amid corrective short-covering

  • Front-month April lean hog futures posted a fresh contract low yesterday but trimmed losses into the close. Followthrough short-covering is expected to lift the market this morning as contracts are severely oversold.
  • But buying will be limited as the pork cutout market has softened $2.54 over the past week to push some packers' profit margins back into the red.
  • But with April lean hog futures trading at around a $1.50 premium to the cash index, which stands at $77.75, there is risk the market could continue to soften.
  • The cash hog market is expected to be mostly steady today as some packers are in need of supplies; most are not concerned about being able to secure supplies, however.
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