Market Snapshot, Noon CT (VIP) -- April 16, 2014

April 16, 2014 07:02 AM

Corn futures are 6 to 7 cents lower in old-crop contracts, while new-crop are roughly 4 cents lower.

  • Selling in old-crop contracts picked up on the front-month's dip below $5.00.
  • Light pressure stems from news Ukraine's 2013-14 grain exports have climbed to 28.6 MMT as of April 16, according to the nation's ag ministry. The country plans to export 33 MMT by the end of the marketing year in June. This reminds that shipments are currently seeing little impact from political tensions in the region.
  • Traders are brushing off another week of strong ethanol production as strong demand is known. Ethanol production the week ended April 11 rose 43,000 barrels per day to 939,000 bpd. Ethanol stocks declined 455,000 barrels to 15.95 million barrels.
  • Traders are not overly concerned about a winter storm warning for areas of Minnesota, Wisconsin and Michigan that is expected to be followed by more cold air as the weather is expected to improve next week.
  • Corn is also seeing some mild spreading activity with soybeans.
  • Gulf basis slid 2 cents for April delivery.

Old-crop soybeans are 11 to 15 cents higher while new-crop beans are up 5 to 6 cents.

  • The chart posture of the soybean market continues to favor market bulls. The front-month has turned the $15.00 level into support and it hit a new contract high overnight.
  • Traders still have yesterday's impressive crush data in mind as it reflected high demand despite historically tight supplies and lofty prices. This has some thinking additional reductions to 2013-14 carryover may be warranted.
  • The fact the old-crop/new-crop spread is near its high means new-crop beans will likely continue to tag along with any old-crop soybean rally.
  • Gulf basis firmed 2 cents for immediate delivery, bringing it to its highest level in two weeks today thanks to tight supplies and strong competition from crushing demand.
  • Traders are brushing off disappointing Chinese GDP data today, as traders continue to believe that China will enact stimulus measures if the situation worsens.

Wheat futures have softened to post losses of 8 to 9 cents in the SRW market, while HRW wheat is fractionally to 7 cents lower. HRS wheat is 8 to 10 cents lower in most contracts.

  • Profit-taking amid softer corn prices and a stronger U.S. dollar index is weighing on the wheat market today.
  • Traders will not know the full extent of recent freeze events winter and spring wheat country until later this week.
  • But traders are not overly concerned about recent or forecast snow as spring wheat seeding is just getting started.
  • The market is also being pressured by news Ukraine's 2013-14 grain exports reached 28.6 MMT as of April 16, according to the nation's ag ministry, or roughly 86.7% of the nation's planned exports for the marketing year that ends in June.
  • Ukraine farmers have sown 2.58 million hectares of early spring grain as of today, which is 92% of the expected sowing area, according to the nation's ag ministry. This eases concerns regarding recent reports that up to 20% of Ukraine's land may not be planted this year due to political tensions.
  • Adding pressure, Germany's farm cooperatives raised their 2014 wheat crop forecast marginally to 24.74 MMT. On the other hand, Toepher today lowered its German wheat crop estimate by 920,000 MT to 23.95 MMT.
  • SRW wheat basis is up 2 cents for immediate delivery this morning.

Live cattle futures are back to mixed trade, with nearbys favoring the upside. Feeder cattle futures are also mixed.

  • Traders continue to even positions as they wait for cash cattle trade to begin.
  • Most expect steady to lower prices compared to last week's $147 action on the Southern Plains, but the front-month is already $1.50 below last week's trade.
  • The boxed beef market continues to flash signs it has stabilized. This morning, Choice cuts firmed 30 cents and Select gained 82 cents. Of note, movement was strong at 121 loads.
  • This should help cash prices from falling sharply, despite heavier showlists and negative cutting margins.
  • Selling in the front-month feeder cattle contract is being limited by the slight discount it holds the cash index. But profit-taking remains the dominant action today.

Lean hog futures have improved to mixed trade, with summer-month contracts slightly higher and deferreds under pressure.

  • Marked improvement in the product market has lifted nearby contracts today. The pork cutout value surged $2.24 this morning, and even more impressive, movement surged to 319.91 loads.
  • This along with a lower cash hog market today will improve packer cutting margins.
  • Packers are well supplied on near-term needs and hog weights remain near record highs. This is keeping cash hog bids mostly $1 lower today.
  • USDA reports average hog weights in Iowa/Minnesota the week ended April 12 hit yet another record high of 285.7 lbs., topping last week's record by 0.2 pound. This is up 9.2 lbs. from year-ago.
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