Market Snapshot, Noon CT (VIP) -- April 11,2013

April 11, 2013 07:05 AM
 

Corn futures have softened but remain 1 to 3 cents higher in old-crop futures while new-crop is mixed.

  • Old-crop corn continues to see light support from signs the price break has improved demand.
  • Yesterday's surge in weekly ethanol production signals blenders are boosting production on improving margins. And this morning's weekly corn export sales came in near the upper end of expectations at 185,200 MT for 2012-13 and 290,800 MT of 2013-14; the overall tally was up from the week prior.
  • Recent improvement in Gulf basis levels signals more export demand news may lie ahead. At midday, basis is 3 cents firmer for delivery the later half of April and up 6 cents for June delivery.
  • Also, basis levels around the country are firming, as supplies are tight and farmers have been unwilling sellers at current prices.
  • There is also some chatter about planting delays due to cold, wet conditions across the Corn Belt. Concerns are limited and the precip is welcome, but the possibility is helping limit selling interest in new-crop corn futures for the time being.

 

Soybean futures are mixed with old-crop 4 to 11 cents higher and new-crop futures mostly 7 to 9 cents lower amid bull spreading.

  • While the initial response to USDA's Supply & Demand Report yesterday was negative, traders are covering short positions in old-crop beans today as they recognize USDA's 125 million bu. 2012-13 carryover peg represents tight supplies.
  • Basis strength around the country is also indicative of this.
  • But this morning's lighter-than-anticipated weekly export sales of 319,200 MT for 2012-13 and 64,500 MT for 2013-14 add a note of caution, as it reminds that a record-large South American crop is slowing demand for U.S. beans.
  • Soybean plantings would likely increase if there are acres switched out of corn due to planting delays. This is pressuring new-crop soybeans.

 

Wheat futures have pared early gains to trade mixed in Chicago, 3 to 7 cents higher in Kansas City and mostly 2 to 4 cents higher in Minneapolis.

  • Wheat futures continue to see light short-covering after a second consecutive overnight freeze on the Plains as far south as northern Texas. Therefore, Kansas City wheat is the upside leader.
  • Also, the market is benefiting from USDA's daily export sales announcement that China bought 360,000 MT of SRW wheat for 2013-14 delivery. This is confirmation of talk last week that the country had bought up to 16 cargoes of U.S. wheat.
  • But an unimpressive weekly export sales report this morning that came in near the lower end of expectations is limiting buying interest.
  • Precip in the forecast for the Northern and Central Plains over the weekend is limiting buying interest in the Chicago and Minneapolis wheat markets.
  • Plus, today's Drought Monitor reflected improvement in areas of the Central and Southern Plains over the past week, though much more is needed.

 

Live cattle futures are higher in all but the far-deferred contracts. Feeder cattle futures are favoring the downside in mixed trade.

  • After a number of contracts hit contract lows yesterday, traders are mildly covering short-positions amid ideas the downside has been overdone.
  • Plus, futures are at a discount to the cash cattle trade in Texas and Kansas yesterday at $127. Northern locations have held out for better prices.
  • While supplies are tightening and the seasonal tendency is for an uptick in demand as consumers fire up the grill, the boxed beef market has struggled to put in a low. An abnormally cold start to spring and recent precip is thought to be deterring grilling demand.
  • This has also kept packer profit margins in the red.
  • This morning, Choice boxed beef cuts fell 67 cents and Select cuts softened $1.45, but movement improved to 141 loads.
  • Relatively light weekly beef export sales of 10,200 MT add to demand concerns.
  • Strength in the corn market is giving bears a slight advantage in the feeder cattle market, though futures have seen some light short-covering on ideas the downside was overdone.

 

Lean hog futures are enjoying slight gains in most contracts ahead of midday.

  • Signs that the seasonal rally in pork demand may finally be getting started is giving the hog market a boost.
  • The pork cutout value rose and movement was strong in the mandatory-reported market yesterday. This morning, the pork cutout value is up another 66 cents and movement was solid at 248.4 loads.
  • But countering this was a 35,000-MT slide in weekly pork export sales to 13,300 MT for the week ended April 4 relative to the week prior.
  • The cash hog market is mostly steady today with some weaker undertones on varied demand. The winter storm event in the northwest Corn Belt has disrupted transportation and slowed slaughter runs.
  • Outside markets are also generally friendly with the U.S. dollar index under heavy pressure and the stock market enjoying gains.
     
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