Market Snapshot, Noon CT (VIP) -- April 1, 2013

April 1, 2013 07:08 AM
 

Old-crop corn futures remain 40-plus cents lower today after a limit-lower close last Thursday. New-crop corn futures are mostly 4 to 5 cents lower.

  • Old-crop corn futures are facing followthrough selling after USDA's Quarterly Grains Stocks Report Thursday signaled that either use has slowed more than anticipated or the 2012 corn crop was larger than USDA has indicated.
  • Thus, traders are working to find a price that attracts demand for old-crop corn.
  • Goldman Sachs cut its three-month forecast for U.S. corn futures by $1 to $6.50 per bu. in response to USDA's corn carryover forecast.
  • Export sources report that Japan has priced more than 500,000 MT of corn and is seeking another 200,000 MT to take advantage of the recent price decline.
  • There is also talk that South Korea plans to buy 1.1 MMT of optional-origin corn.
  • Weekly corn export inspections of 19.139 million bu. came in just above expectations and improved nearly 2 million bu. from the week prior.
  • Pressure on new-crop corn is being limited by USDA's forecast for plantings to edge up marginally from year-ago and what looks to be a late start to planting.

 

Old-crop soybean futures remain roughly 11 to 14 cents lower. September and November futures are slightly lower, while farther deferred months are slightly higher.

  • Spillover from corn is making it tough for beans to find buyers today.
  • Plus, traders still have USDA's heavier-than-anticipated soybean stocks estimate on their minds.
  • New-crop beans are holding up well in the face of spillover pressure, thanks to USDA's soybean planted acreage estimate of 77.1 million, which would be down from year-ago and well below expectations.
  • This morning's weekly export inspections report was nothing to get excited about. Inspections of 16.3 million bu. matched expectations and declined more than 2 million bu. from the week prior.
  • Nearby contracts' move through the psychological $14.00 level is also encouraging some technical selling.

 

Wheat futures have softened to post double-digit losses at all three locations, with Chicago leading the decline.

  • Spillover from corn is weighing on wheat futures today. Also, USDA's wheat stocks estimate came in above expectations last week.
  • Rain in the near-term forecast for the Southern Plains is weighing on the wheat market. The 6- to 10-day forecast also holds above-normal chances for precip. This afternoon, traders will get an update on the state of the winter wheat crop.
  • But downside risk is being limited by ongoing signs U.S. wheat is competitive globally. Weekly wheat export inspections of 25.736 million bu. topped expectations and improved nearly 5 million bu. from the week prior.
  • Also, South Korean feed manufacturers plan to buy 450,000 MT of feed wheat for August to September arrival to take advantage of the recent price break.

 

Live cattle futures continue to post slight losses in most contracts, while feeder cattle futures are still sharply higher.

  • Concerns about boxed beef demand continue to weigh on the cattle market.
  • While the seasonal tendency is for a bounce in consumer beef demand this time of the year, persistent wintery weather has delayed this rally.
  • Choice cuts did firm 73 cents this morning, though Select cuts fell 36 cents and movement was relatively light at 86 loads.
  • Pressure is also being limited by sharply higher cash cattle trade last week at $127 to $129. Nearby futures are trading in line with these prices.
  • Feeder cattle futures continue to benefit from indications corn supplies are not as tight as thought and some technical buying as followthrough buying today signals a low is in place.

 

Lean hog futures have improved to post slight gains through the May contract, while deferred months remain slightly lower.

  • The slightly heavier-than-anticipated supply outlook USDA painted for hogs Thursday continues to weigh on deferred lean hog futures.
  • But unexpected cash strength is giving nearby contracts a boost. Higher cash hog bids today signals packers are short-supplied on near-term needs.
  • Thus, traders are paying little attention to the hefty premium April lean hogs hold to the cash hog index.
  • Also, the pork cutout price has firmed slightly to the past two days, boosting hopes demand may be improving seasonally.
  • However, movement has remained unimpressive and packers are cutting in the red.
     
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