Market Snapshot, Noon CT -- (VIP) -- March 13, 2014

March 13, 2014 07:00 AM


Corn futures have pared losses to trade mixed.

  • Corn futures have turned mixed, but are mostly marginally lower at midday. Spillover from the wheat market is also weighing on corn futures, though the move higher in beans has helped the market trim losses.
  • While this morning's Weekly Export Sales Report indicated still-strong demand for U.S. corn, this is largely factored into prices. Sales of 683,400 MT for 2013-14 and 103,600 MT for 2014-15 met expectations.
  • Warmer temps have melted ice on rivers and freight rates have slid, weakening basis at interior locations.
  • Gulf basis slid 1 to 3 cents for near-term delivery while May and later delivery was steady to a penny higher.

Soybean futures reversed course to post gains of 15 to 23 cents in old-crop futures with new-crop 2 to 6 cents higher.

  • Bull spreading has returned to the soybean market, lifting old-crop contracts and limiting gains in deferred months. The May contract has moved back above the key $14.00 level.
  • Support for nearby contracts stems from ongoing strong demand for a small U.S. soybean supply thanks to logistics troubles in getting the Brazilian bean crop shipped.
  • In fact, Reuters has reported that China has canceled 10 cargoes (up to 600,000 MT) of soybean purchases from South America, as widely rumored yesterday. Export sources say China is looking to cancel or delay another 30 cargoes of soybean commitments because of weak demand and poor crush margins.
  • Also, heavy rains in Mato Grosso are reportedly deteriorating the condition of the nation's bean crop and slowing harvest.
  • Weekly soybean export sales of 113,500 MT for 2013-14 and 776,900 MT for 2014-15 more than doubled expectations, with China as the lead buyer of new-crop beans.
  • But buying interest in new-crop contracts is being limited by expectations for a rebound in production this growing season.

SRW wheat futures remain 4 to 7 cents lower with the exception of the front-month, which is still 12 cents higher. HRW wheat is mostly 3 to 5 cents lower while HRS is down 3 to 10 cents.

  • Traders are taking advantage of recent gains by booking some profits. The market's uptrend remains untested.
  • Traders will remain hesitant to push futures sharply lower considering ongoing drought on the Southern Plains and uncertainty in Ukraine.
  • This week's National Drought Monitor reflects a slight expansion and an increase in the intensity of drought conditions in the Central and Southern Plains.
  • However, the near-term forecast does call for several inches of rain for these regions.
  • Some traders are also waiting to see how the weekend vote turns out regarding Crimea.
  • This morning's report reflected weekly wheat export sales of 476,900 MT for 2013-14 and 89,200 MT for 2014-15, which topped expectations. However, the tally was not overly impressive. Traders had hoped for the U.S. to see a marked increase in business due to ongoing shipping troubles in Canada and unrest in Ukraine.
  • USDA's ag attaché in Canada says that shipping delays have forced some mills in Eastern Canada to shut down and other milling operations also say they may have to soon close their doors. This follows news Canada's government will fine the nation's major railways if they do not double grain transport in the next several weeks.

Live cattle futures have improved a touch to trade mixed. Feeder cattle futures have improved to post slight gains.

  • Choice boxed beef values declined for the first time in an extended period this morning, adding credence to ideas a high may be in place or near. Premium cuts of beef dipped 50 cents today while Select firmed $1.04. Movement improved to 80 loads.
  • Cash cattle trade has yet to get underway. The pullback in the boxed beef market is making traders comfortable leaving nearbys at a $4 or more discount to last week's cash cattle prices.
  • However, boxed beef prices are still hovering around record high levels and are up sharply from week-ago. In addition, showlist estimates are down and packers have finally seen margins turn positive.
  • Also limiting pressure, weekly beef export sales of 17,700 MT for 2014 marked a new marketing year high.
  • Feeder cattle futures firmed as the corn market softened. The market's chart posture also clearly favors market bulls, as does a weaker U.S. dollar index.

Lean hog futures have extended early gains to trade sharply higher through the June contract, with deferreds moderately higher.

  • The ongoing surge in the product and cash markets continues to propel futures. Futures triggered buy stops on the way up.
  • The cash hog index continues to strengthen amid tight supplies that are expected to tighten further in the months ahead. Strong demand has also lifted cash prices.
  • Another bullish factor is uncertainty about just how much the porcine epidemic diarrhea virus (PEDV) will constrict supplies in the spring and summer when supplies are typically the tightest of the year.
  • Packers are paying up for market-ready hog supplies again today as winter weather disrupted transportation in some areas this week and strong margins are lifting demand.
  • The pork cutout value did set back 49 cents this morning. Movement was decent at 171.37 loads.
  • The renewed surge has eased concerns that the market may have put in a top. Futures are forging new contract highs again today.
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