Market Snapshot, Noon CT -- (VIP) -- March 21, 2014

March 21, 2014 06:55 AM

Corn futures are steady to marginally firmer in nearbys, with new-crop contracts marginally to 2 cents lower.

  • Spillover pressure from soybean futures, primarily, and wheat futures is keeping corn futures on the defensive today.
  • Coupled with the spillover pressure is position evening ahead of the weekend.
  • However, corn continues to hold up relatively well given the sharp losses in soybeans.
  • Some weakness in the U.S. dollar is providing some support.
  • Pressure is also being limited by news Egypt, a widely known value buyer, purchased 340,000 MT of U.S. old-crop corn.
  • Traders continue to monitor tension in the Black Sea region but have moved to a wait-and-see attitude ahead of the weekend.
  • The lead May contract continue to test support at recent lows ranging from $4.73 1/4 to $4.75.
  • Concerns about domestic feed demand due to the PEDV outbreak and tightening cattle feedlot numbers are limiting traders willingness to push prices higher.
  • Gulf corn basis is a penny higher for immediate and May delivery and unchanged for April, June through August delivery.

Soybean futures are down sharply with old-crop contracts down 20-plus cents and new-crop contracts mostly 11 to 15 cents lower.

  • With no fresh news available, technical selling and profit-taking continue to drive prices lower in late-morning trading.
  • Traders continue to shrug off the slightly weaker U.S. dollar index as that action is seen as corrective following recent strength.
  • Chart watchers are becoming more concerned the recent volatile price action is a sign of a potential top being posted.
  • Traders continue to ignore news a top official at Shinograin Oils Corporation says China's 2013-14 soybean imports are expected to be up 13% from the previous year. Traders view the news as already factored into prices. To them, the key is "where" those supplies come from as the U.S. export window has remained open longer than usual.
  • Gulf soybean basis is unchanged for most delivery periods with the exception of May delivery, which is a penny stronger.

Wheat futures are 2 to 5 cents lower across all three wheat flavors.

  • Profit taking and spillover pressure from soybean futures continues to dominate trading.
  • However, futures have trimmed earlier losses in the face of weakening soybean futures, which is giving traders some confidence that recent action is merely corrective.
  • While futures have marked strong losses, no major technical damage has been done as yet on the charts.
  • Traders continue to watch the situation in Ukraine as a substantial premium has been built into prices on the tensions in that key grain exporting region.
  • Also supportive are concerns about the HRW wheat crop, as little is in the forecast in terms of rains for the Central and Southern U.S. Plains the next seven to 10 days. But this is being ignored as traders' focus is on evening positions.
  • Gulf HRW wheat basis is unchanged at midday while SRW basis is 5 cents weaker for immediate delivery, unchanged for April and May delivery, 6 cents weaker for June and July delivery and 3 cents lower for August delivery.

Nearby live cattle futures are slightly lower while the December and later contracts are slightly higher. Feeder cattle futures are slightly lower.

  • Position evening ahead of this afternoon's Cattle on Feed Report has futures favoring the negative side in the front contracts.
  • Traders look for the report to continue to show tight supplies with the On Feed expected at 98.9% and Marketings expected at 97.0% of year-ago levels.
  • Placements are expected to come in at 109.7% of year ago due to the continuing drought in the Southern Plains.
  • The $6 discount that April futures carry versus the $150 cash cattle trade yesterday in the Southern Plains is limiting selling.
  • Wholesale beef is provided a mixed message this morning with Choice down 74 cents and Select beef up 18 cents. Movement is a light 64 loads.
  • Traders are watching for followthrough from yesterday's key bearish reversal as a signal a top has been posted. Earlier in the month, a similar technical signal was followed by a period of price stability and then the latest rally.
  • Feeder cattle are weaker on position evening ahead of this afternoon's report.

Lean hogs continue to trade mixed with the front contracts slightly weaker and the October and later contracts stronger.

  • Position evening and spread unwinding ahead of the weekend are dominating trade this morning.
  • The nearbys are also reacting to an 11-cent decline in the pork cutout value and slow movement of 105.85 loads..
  • The National Animal Health Laboratory Network says 296 new cases of PEDV were confirmed the week ended March 9. While down from the previous week, it still represents an elevated amount.
  • Packers' profit margins remain in the black, which is encouraging them to keep kill lines running as full as possible amid tighter-than-expected marketings.
  • April lean hog futures still hold more than a $6 premium to the cash index, which limits buying interest for the moment. But the cash index continues to rise.
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