Market Snapshot, Noon CT (VIP) -- April 17, 2014

11:53AM Apr 17, 2014
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Corn futures continue to post fractional to 4-cent losses.

  • The fact that May and December corn have failed to move back above the $5.00 level today is giving bears a slight advantage in the corn market today.
  • Traders are also reducing risk exposure ahead of a long, holiday weekend.
  • The market is also encouraged by the forecast for warmer Midwest temps next week.
  • On the other hand, signs of ongoing demand strength is limiting selling interest in the market outside of profit-taking.
  • Weekly corn export sales of 601,900 MT for 2013-14 and 192,600 MT for 2014-15 came in at the upper end of the wide pre-report trade guess. The pace of commitments remains well above what is needed to meet USDA's export forecast.
  • Also, USDA announced a 125,000 MT corn sale to South Korea for 2013-14.

Soybean futures remain split with old-crop 4 to 5 cents lower and new-crop 2 to 3 cents higher.

  • Bull spread unwinding remains the dominant action in the soybean market.
  • While this morning's Weekly Soybean Export Sales report reminded of slowing demand for U.S. old-crop beans, this has long been expected and is actually overdue. Meanwhile, new-crop sales of 400,700 MT were solid and helped the overall tally come in near the top of pre-report expectations.
  • Soymeal sales dipped notably from last week's impressive tally to 36,600 MT for 2013-14 and 84,000 MT for 2014-15.
  • Old-crop beans are also seeing pressure from talk Chinese buyers may default on an additional 1.2 MMT of soybean shipments from the U.S. and Brazil as Chinese imports are struggling to obtain letters of credit due to poor crush margins and backlogged supplies.
  • But countering this is news that Argentine trucker and dockworkers have started an indefinite strike. Some exporters have reportedly canceled business through Saturday.

Wheat futures have pared gains slightly. SRW wheat futures are 6 to 8 cents higher while HRW and HRS wheat are up 9 to 10 cents.

  • The chart posture clearly favors market bulls and traders are following the trend ahead of the extended weekend.
  • The market expects USDA's crop condition update to reflect ongoing deterioration with the winter wheat crop and slow planting progress after cold temps this week on Monday.
  • The latest Drought Monitor reflects ongoing worsening of the drought in the HRW wheat belt, which makes the crop even more vulnerable to freeze damage.
  • The market is also benefiting from weekly wheat export sales that topped expectations at 438,000 MT for 2013-14 and of 359,900 MT for 2014-15.

Live cattle futures are moderately to sharply lower, with the front-month leading to the downside.

  • Cattle futures remain under pressure after the start of light cash cattle trade on the Southern Plains at $146 -- $1 below last week's action.
  • Futures already had lower trade factored into prices, but traders are nevertheless using this as an opportunity to lighten long positions ahead of the weekend. This also indicates they expect more cash market declines ahead.
  • Traders are brushing off a $1.65 jump in Choice boxed beef this morning and a $1.06 gain in Select values. Movement was solid at 107 loads. This confirms ideas beef prices have found value levels and that a near-term low is likely in place for the product market.
  • Similarly, traders are ignoring a marketing year high in beef export sales the week ended April 10 of 21,900 MT.
  • Feeder cattle futures are facing heavy profit-taking to wrap up the week as some contracts have broken the long-term uptrend.

Lean hog futures have improved a touch to trade slightly to moderately higher in all 2014 contracts except the front-month, which is moderately lower.

  • A weak cash hog market is weighing on the front-month. Cash hog bids are $1 to $2 lower to wrap up the week amid light demand. The Easter holiday has shortened packer's kill schedules and most plants are well-supplied on near-term needs.
  • The front-month and the lean hog index are back in alignment.
  • Deferred months are benefiting from signs the pork market is stabilizing. Movement surged yesterday on a moderate price pullback. This morning, a 21-cent decline in the pork cutout value was met with decent movement of 180.3 loads.
  • Packer profit margins are back in the black after a brief dip into negative territory.