Market Snapshot, Noon CT (VIP) -- Advice -- February 13, 2013

March 27, 2013 07:02 AM
 

CORN AND SOYBEAN PRODUCERS: MAKE INITIAL 10% 2013-CROP SALES

December corn futures and November soybeans have rallied nearly 30 cents from the lows posted early this month. While prices aren't at levels at which we had hoped to start 2013-crop marketings, the recent price strength and the calendar say it's time to make initial new-crop sales. Plus, we want to get some sales on the books prior to USDA's reports on Thursday. Hedgers and cash-only marketers are advised to sell 10% of expected 2013-crop corn and soybean production via cash forward contract because new-crop basis is relatively strong for harvest delivery.

Corn futures have improved to post gains of 1 to 6 cents in all but far deferred contracts. Old-crop futures are leading gains.

  • Fresh news is lacking this morning, so traders remain focused on readying positions for USDA's key Prospective Plantings and Quarterly Grain Stocks Reports. Three of the past five quarterly stocks reports have spurred limit-moves in front-month corn contracts.
  • While export demand for old-crop corn remains generally lackluster, traders still anticipate a tight quarterly corn stocks estimate of 5.03 billion bu. as of March 1. This would be the smallest tally since 1998.
  • Pre-report expectations are for USDA to estimate a marginal increase in corn plantings in 2013 to 97.3 million acres.
  • The market has brushed off reports the U.S. is importing a cargo of Argentine corn and that more may be on the way are limiting buying interest.
  • Similarly, the market showed little reaction to data showing a 0.5% decline in weekly ethanol production to 805,000 barrels per day. Ethanol stocks declined 5.5% to 17.4 million barrels the week ended March 22.

 

Soybean futures have improved to trade 1 to 5 cents higher in old-crop futures, while new-crop is mixed.

  • Traders are covering short positions and heading to the sidelines ahead of a big day of data releases from USDA tomorrow.
  • First up is USDA's weekly export sales report, which the market expects will reflect still-solid soybean export demand.
  • Then at 11:00 a.m. CT, USDA will release its Quarterly Grain Stocks and Prospective Plantings Reports. Pre-report expectations are for USDA to peg soybean stocks at a tight 947 million bu. and for it to show soybeans gaining acres over year-ago for seedings of 78.5 million acres.
  • Gulf soybean basis rose 6 cents for immediate delivery this morning and it held steady at midday. This signals fresh export demand for U.S. soybeans may be on the horizon.
  • But the market remains wary of adding long positions as the record-large South American crop will eventually come available.

 

Wheat futures have extended early gains to trade mostly 5 to 7 cents higher in Chicago, 6 to 9 cents higher in Kansas City and 5 to 6 cents higher in Minneapolis.

  • The market is paying a bit more attention to the state of the winter wheat crop as weekly condition reports will start up again next week.
  • Recent freeze events in the Plains are concerning as much of the Texas and Oklahoma crop is jointing. Plus, the forecast holds chances for a major winter storm in the Central Plains early next week.
  • Traders are also readying for USDA's Weekly Export Sales Report tomorrow. Recent reports have signaled U.S. prices are competitive globally. But recent dollar strength could slow this demand, however.
  • Also, traders are readying for USDA's key reports tomorrow. Pre-report expectations are for USDA to peg all wheat plantings at 56.4 million acres, up 700,000 acres from year-ago.
  • The market also expects USDA to peg quarterly wheat stocks at 1.167 billion bu., which would be down 32 million bu. from year-ago.

 

Live cattle futures are moderately to sharply higher through the August contract, while deferred months are mixed. Feeder cattle futures are mostly moderately higher.

  • The start of light cash cattle trade in Texas yesterday boosted hopes cash trade will take place at prices at least steady with the top end of last week's trade at $125.
  • Tighter showlist estimates are also encouraging of that thought.
  • But ongoing declines in the boxed beef market limit thoughts packers will pay up for cash cattle. This morning, Choice cuts slid 36 cents and Select declined 18 cents. Movement did surge to 150 loads, however.
  • Persistent winter weather has delayed retailer purchases for the grilling season. Plus there is concern historically high prices may face some consumer resistance.
  • Forecasts for tightening supplies through 2013 and ideas the downside has been overdone are encouraging short-covering in the feeder cattle futures.

 

Lean hog futures are posting slight to moderate losses ahead of midday.

  • Lean hog futures are facing profit-taking today as another decline in the pork market yesterday squashed hopes the market had put in a low.
  • The market typically enjoys a seasonal rebound this time of the year, but chilly temps have delayed spring grilling demand and more cold temps are expected next week.
  • Cash hog bids are mostly steady today as packers are in greater need of supplies than earlier thought and supplies are tightening. Average hog weights declined 1.3 lbs. in Iowa and southern Minnesota last week.
  • Light pressure also stems from the around $5.00 premium April lean hogs hold to the cash index as well as strength in the U.S. dollar index.
  • Traders are also beginning to ready positions for the Quarterly Hogs & Pigs Report tomorrow that is expected to show a 0.7 percentage point expansion in the all hogs and pigs crop over year-ago.
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