CORN CASH-ONLY MARKETERS: TRIM OLD-CROP GAMBLING STOCKS... July corn futures have rallied roughly 70 cents from the April low and basis has also strengthened during that span. With the contract set to enter delivery next Friday and July corn holding around a 75-cent premium to the September contract, we want to act now to capture price strength. Cash-only marketers are advised to sell 15% of 2012-crop to get to 90% sold on old-crop. Be prepared to finish old-crop sales if the rally in July corn futures stalls after filling the April 1 gap.
CORN PRODUCERS: INCREASE 2013-CROP SALES... December corn futures have moved into the upper end of the range that has contained prices all spring, a level that has stalled previous rallies in March, April and earlier this month. With the market showing weakness this morning, there are indications this resistance will again turn back December corn. As a result, hedgers and cash-only marketers are advised to make a 15% cash forward contract sale for harvest delivery on expected 2013-crop production. This pushes new-crop sales to 25% of expected production via cash forward contract.
Corn futures have trimmed sharp losses but are still lower with the July contract down 3 cents and new-crop contracts down about 7 to 9 cents.
- The sharp rise in the U.S. dollar index yesterday and the selloff in equities and Treasuries prompted by Federal Reserve Chairman Ben Bernanke's comments yesterday continue to weigh on corn futures and the bulk of the commodity sector today.
- Traders are booking profits in the midst of today's sell-off. Both the July and December contracts are trading inside of yesterday's large range with yesterday's lows providing support.
- The Weekly Export Sales Report showed sales of 133,400 MT for 2012-13 and 77,100 MT for 2013-14, within trade expectations but confirming weak export demand.
- The report along with news U.S. corn accounted for just 40.8% of Japan's corn purchases in April, compared to 83.7% last year underlined that view.
- Forecasts for two to four inches of rain in the upper Midwest is providing some mild support in new-crop contracts as farmers push to complete planting.
- After slipped a penny for July delivery in early morning trade, Gulf corn basis is now listed as steady for all months.
Soybean futures continue to post losses in the teens in the July old-crop contract, while new-crop months are down 20-plus cents.
- The sharp gains in the U.S. dollar index and the broad selloff in the commodity complex prompted by that strength along with losses in equities and bonds is triggering profit-taking today.
- In addition, major disappointment came from this morning's Weekly Export Sales Report, which showed slowed soybean demand as sales of 52,600 MT for 2012-13 and 108,500 MT for 2013-14, which were well short of expectations.
- Weekly sales of soyoil fell well short of expectations and declined 95% from the week prior to 700 MT; soymeal sales of 26,600 MT for 2012-13 and 114,600 MT for 2013-14 met expectations.
- Adding to the negative tone is disappointing economic data out of China which raises concerns about the country's economic health and appetite to purchase U.S. soybeans going forward.
- The market also expects most producers to have made major progress in getting the soybean crop planted before rains move back into the upper Midwest today.
- Late-morning trade at the Gulf is showing gains in basis with immediate delivery up 4 cents, early July up 7 cents and August up 2 cents. Other delivery periods are listed as steady.
Wheat futures are mostly 1 to 2 cents lower in Chicago, but Kansas City and Minneapolis are now enjoying slight gains.
- The commodity-wide selloff is not hitting nearby wheat contracts as hard as other grains and oilseed futures despite spillover pressure from corn and beans and highly negative outside markets.
- With harvest underway, hedge pressure will continue to limit buying interest in the wheat market.
- Traders are finding some good news in this morning's Weekly Export Sales Report which shows decent export demand despite the GMO wheat scare. Sales of 432,700 MT for 2013-14 and 2,000 MT for 2014-15 met expectations.
- Strategie Grains has raised its EU wheat crop forecast by 600,000 MT from last month to 131.5 MMT.
- Spring wheat planting activities on the Northern Plains are again coming to a halt as rains move into the region. This has prompted light short-covering in Minneapolis wheat futures.
- Gulf soft red winter wheat basis is listed as unchanged for most delivery periods with the exception of August, which is reported as a penny higher.
Live and feeder cattle futures are slightly to moderately lower.
- The commodity sell-off has traders booking some profits after yesterday's strong gains as they wait for cash trade to begin. However, futures are finding support at yesterday's lows.
- Bids and asking prices remain wide, signaling the cash cattle standoff may well continue into Friday. Last week, cash sales took place at $120 in the Southern Plains. Futures are now in line with these prices.
- Choice boxed beef values edged down 29 cents this morning but Select rose $1.18 but movement is a light 92 loads.
- Traders are also readying for Friday's Cattle on Feed Report, which is expected to show all categories below year-ago levels.
- The market will also have the Cold Storage Report with which to gauge demand Friday. Pre-report expectations are for frozen beef stocks at the end of May to come in at 511.5 million lbs., up 0.3% from the month prior and 19.1% above the five-year average.
- Weekly beef export sales of 9,000 MT declined relative to the week prior, but exports of 15,800 MT were a marketing-year high.
Lean hog futures continue to see choppy trade, with deferred contracts favoring the downside.
- Hog futures are finding some negative pressure from the commodity-wide sell-off prompted by the surge in the U.S. dollar index and weakness in equities.
- However, bullish traders are finding positives in the limited losses in the hog complex despite the severity of the commodity sell-off
- Futures contracts are finding buying support at yesterday's lows and above the gap left Wednesday.
- Traders are not ready to turn bearish with July futures at nearly a $4 discount to the cash hog index and supplies tightening.
- The pork cutout value eased 78 cents this morning on somewhat moderate movement of 145.9 loads.
- Kill hours are being trimmed by some packers, but most packers are still cutting in the black, which is keeping the cash market mostly steady.