Market Snapshot, Noon CT (VIP) -- April 10, 2013

April 10, 2013 07:23 AM
 

Corn futures softened slightly to trade 1 to 3 cents lower across the board following USDA's report release.

  • Traders initially reacted to USDA's Supply & Demand Report by selling futures, but the market has since calmed down and has even seen brief periods of short-covering.
  • USDA did raise its carryover estimate for 2012-13 corn by 125 million bu. from last month to 757 million bu., but the increase was 67 million bu. less than traders anticipated.
  • USDA raised its global corn carryover peg more than expected to 125.29 MMT. Its South American production pegs for corn also topped expectations at 26.5 MMT for Argentina and 74.0 MMT for Brazil.
  • But selling interest is being limited by indications some bargain buying is occurring and that slow farmer sales are making supplies tough to come by. Gulf basis firmed another 2 cents for the latter half of April after rising a penny for the first half of the month this morning.
  • A surge in ethanol production last week also signals improved demand.
  • Also, cold, wet weather in the Corn Belt with more expected over the next two weeks raises concerns about planting delays.

 

Soybeans have softened to trade roughly 5 to 11 cents lower with new-crop futures leading losses.

  • USDA left its old-crop bean carryover projection unchanged from last month at 125 million bu., whereas traders had expected a 12-million-bu. increase. But traders are having a sell-the-fact reaction to this friendly number.
  • The market is putting more attention on the fact USDA raised its global carryover estimate for 2012-13 by 2.42 MMT from last month to 62.63 MMT. Traders had expected USDA to trim this figure slightly.
  • Adding to the negative tone, USDA left its Brazil and Argentine production estimate unchanged from March at 83.5 MMT and 51.5 MMT, respectively, whereas pre-report expectations were for USDA to cut these numbers.
  • Chinese trade data is adding light pressure; it showed China imported 3.84 MMT of soybeans last month, which is up 32.4% from February but down 20.5% from year-ago.
  • New crop beans are also being pressured by cold, wet weather in the Corn Belt which ups the odds some acres intended for corn plantings could be switched to beans.

 

Wheat futures softened slightly following USDA's reports to post losses ranging from 14 to 18 cents in Kansas City and Minneapolis, while Chicago is down 10 to 14 cents.

  • Pre-report expectations hit the nail on the head in terms of wheat carryover expectations. USDA raised its 2012-13 carryover estimate 15 million bu. from last month to 731 million bushels. But USDA's global carryover projection for wheat came in on the bearish side of expectations with a 4.03-MMT increase to 182.26 MMT, while the trade expected just a 370,000-MT increase.
  • Light pressure also stems from news Ukraine will likely lift its export limit on wheat within the next two weeks, according to the Ukrainian Agrarian Association.
  • The market continues to ignore reports of sub-freezing temps as far south as northern Texas overnight. It will take a couple of weeks to assess damage.

 

Live cattle futures have softened to trade slightly to moderately lower. Feeder cattle futures continue to post moderate losses.

  • Traders are reducing risk ahead of the start of cash cattle trade. Last week, sales took place at mostly $128, which is above nearby futures prices.
  • Showlist estimates are down and snow and ice in areas of the western Corn Belt and the Central and Northern Plains could disrupt transportation.
  • Boxed beef demand remains sluggish as packers moved only 107 loads this morning, though Choice boxed beef prices rose 18 cents and Select cuts are up 23 cents.
  • Light pressure also stems from USDA's Supply & Demand Report in which USDA trimmed its 2013 export projection by 15 million lbs. from March, though it also trimmed production estimate by 230 million pounds.
  • Concerns about how consumers will respond to higher beef prices as beef supplies tighten are also weighing on deferred contracts.

 

Lean hog futures continue to enjoy slight gains in most contracts.

  • Ideas pork demand will soon improve are giving the lean hog market a boost today.
  • In addition, cash hog bids are holding mostly steady today despite negative cutting margins. This signals supplies are tightening.
  • Wintry weather in parts of the northwest Corn Belt and the Northern Plains is adding to supply concerns as this has disrupted transportation and processing in some areas.
  • Yesterday in the mandatory reported market the pork cutout value rose $1.09 on movement of 382.9 loads. The voluntary market showed the pork cutout value down 3 cents on very light movement of 15 loads.
  • Outside markets are a mixed bag. While the U.S. dollar index is firmer, so is the stock market. Crude oil futures are under pressure.
     
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