Wheat producers: Increase 2014-crop cash sales… Wheat futures continue to roll over and are flashing technical sell signals despite deteriorating winter wheat crop conditions. That suggests traders are convinced the premium they built into the market on the runup from the winter lows was more than enough. Those attitudes can change, but there's risk of more near-term price pressure. We advise wheat hedgers to sell another 25% of expected 2014-crop production to get to 75% forward priced on expected production. We advise cash-only marketers to sell another 10% of expected new-crop production to get to 60% sold.
Corn futures have trimmed early losses and are mostly around a penny lower.
- Technical selling due to May corn's struggle to find buying interest above $5.00 has traders solidly on the sell side today.
- Traders are ignoring today's export sales report that noted sales of 658,700 MT for 2013-14 and 58,000 MT for 2014-15. The overall tally met expectations, but strong demand is no longer "news." Exports of more than 1.217 were also strong.
- Brazil's Conab made a minor revision to the country's corn crop, pegging it at 75.46 MMT versus 75.18 MMT in March.
- Interior corn basis is steady due to light farmer selling. Gulf basis bids are firm.
Old-crop soybean futures are posting double-digit losses, while new-crop futures are 6 to 8 cents lower.
- Profit-taking along with spillover selling from both the wheat and corn markets has soybean futures swinging lower this morning.
- Concerns about the general selloff in financial markets, including the U.S. dollar index, are also contributing to the negative attitude in ag commodities.
- Adding to the negative tone is news China defaulted on at least 500,000 MT of soybean shipments from the U.S. and Brazil as importing companies have been unable to secure credit due to poor crush margins.
- Also, while China's trade data improved in March, significant declines in the nation's exports and imports keep concerns about the nation's economy close at hand.
- Also today, Brazil's Conab has raised its soybean production peg by 700,000 MT to 86.1 MMT after slashing the estimate last month due to drought.
- Also, an as-expected Weekly Export Sales Report showing sales of 79,100 MT for 2013-14 and 210,400 MT for 2014-15 gave bulls little to get excited about.
- Exports of 700,400 MT were up 6% from the week prior, with China as the lead recipient. Still-strong shipments are impressive considering we are well past the point where the U.S. export window was expected to be close.
- Traders are not overly concerned about the start of a 24-hour strike by port workers and truck drivers at the Rosario grain port in Argentina today. Such events are commonplace in the region.
- Interior soybean basis levels are even due to lack of farmer selling. Gulf basis bids are weaker, however, on decreased demand -- another worry for traders this morning.
Wheat futures are solidly on the downswing due to forecasts for moisture over HRW wheat country next week. In general wheat futures are down 7 to 11 cents across all three flavors
- Forecasts calling for weekend showers for HRW wheat country along with calls for soaking rains late next week have wheat futures under pressure.
- Looking into next week, forecasters are calling for one-half up to two-inch rains to move across western Oklahoma and east-central Kansas Wednesday-Friday next week. Some forecasts call for 85% of the HRW crop in that area to receive beneficial precipitation.
- The rain forecasts comes on top of negative trader reactions to yesterday's as-expected Supply & Demand Report from USDA and today's export sales report that came up short of expectations.
- With rain in the forecast, traders are shrugging off this morning's drought monitor that showed further deterioration in the Oklahoma/Texas panhandle area.
- Traders are also ignoring the downswing in the U.S. dollar index as they react to the negative tone in the financial markets.
Live and feeder cattle futures are moderately lower this morning.
- Profit-taking continues to dominate trade this morning following gains in recent days.
- Traders continue to wait on cash negotiations to settle before committing to new positions. Meanwhile, nearby contracts continue to trade at a $4 to $6 discount to last week's $148 to $150 cash trade.
- Trader sources indicate packers are biding $146, while feedlots are asking $150.
- The wholesale beef market is mixed this morning with Choice beef up 33 cents but Select beef is down 38 cents. Movement is a positive 127 loads, however.
- Traders continue to brush off strong export sales of 18,500 MT the week ended April 3. The tally marked a marketing year high.
- Feeder cattle futures are lower on profit-taking despite the decline in corn futures today.
Lean hog futures mixed, with July and August futures slightly higher and other months slightly to moderately lower.
- The selloff in the equity markets has hog futures under pressure as well.
- Losses are limited in the front-month April contract due to its wide discount to the cash hog index.
- Some profit-taking is underway as well as lean hogs scored strong gains Wednesday. Today's trading range has been confined within yesterday's broad range.
- Traders continue to look at weakness in the wholesale pork trade and stabilizing cash hog prices as signs a top may have been posted in futures and are taking profits.
- Cash hog bids are mostly steady as packers have reduced kill hours to trim negative cutting margins. Margins have improved but further weakness in wholesale prices is a negative.
- The pork cutout value slipped 48 cents this morning and movement is about average at 177.61.
- However, USDA's latest export sales report shows weekly pork sales of 4,200 MT, which are a marketing year low.