Market Snapshot, Noon CT (VIP) -- April 1, 2014

April 1, 2014 07:07 AM

Corn futures continue to trade near their daily highs in followthrough from Monday's reports. Most contracts are 6 to 8 cents higher.

  • New-crop futures are benefiting from USDA reports farmers intend to plant 1 million fewer acres than pre-report expectations. Projected plantings of 91.691 million acres were also well below year-ago.
  • Followthrough buying has been triggered by yesterday's upside key reversal and breakout from the market's consolidated trading range. The surge tripped buy-stops and, more importantly, triggered additional buying. Many contracts are trading at seven-month highs.
  • Traders view the price surge as an opportunity to buy back some acres from soybeans.
  • Meanwhile the slow arrival of spring weather, including snow in some areas of the Corn Belt this week along with cold temps and rain for parts of the Midwest and Delta is lifting traders' concerns about spring planting delays.
  • The South is currently dealing with planting delays. Texas corn plantings stand at 28% complete versus 48% for the five-year average.
  • Interior basis level slipped on increased farmer selling in response to yesterday's gains.
  • Gulf corn basis is steady in midday trading for April, May and July delivery, 1 cent higher for June delivery and five cents weaker for August delivery.


May and July soybean futures are 24 and 28 cents higher, respectively, while deferred contracts are 13 to 19 cents higher.

  • Reminders of tight old-crop bean supplies has those contracts sharply higher as bull-spreading continues to limit gains in new-crop contracts.
  • Short-covering in new-crop soybeans continues as traders are seeing some short-covering after traders viewed yesterday's initial reaction to USDA's record-high soybean planting projection as overdone.
  • The decline under old-support at $11.70 by the November contract quickly triggered buying, which signaled the high-acreage figure had already been factored into the market.
  • Traders are shrugging off news of a cooling Chinese economy as traders believe the nation's government will step in with stimulus measures to boost economic activity if data continues to disappoint.
  • November beans are probing resistance at $12.00 today. Old-crop beans broke through their wide consolidated trading range this week and are enjoying strong followthrough buys today.
  • Soybeans are also benefiting from news China's ministry of commerce raised its soybean import estimate for March by 440,000 MT to 5.69 MMT. The ministry expects bean imports to hold strong in April at 5.11 MMT.
  • Gulf soybean basis is steady at midday for most delivery periods with the exception of the July delivery period, which is 1 cent lower.


Wheat futures of all three flavors continue to face pressure, with most contracts down 5 to 8 cents.

  • Profit-taking continues to dominate trading along with spread unwinding versus corn futures.
  • The lead May SRW contract is again trading under $6.90, an area that previously provided buying support until yesterday.
  • Traders are shrugging off the weekly crop condition updates which reflect continued crop condition declines in the Southern and Central Plains and ongoing dry, windy weather on the Southern Plains as already factored into prices.
  • Meanwhile, the SRW crop in the Midwest is emerging in generally good condition.
  • Ukraine's ag ministry says grain exports climbed to 2.98 MMT in March versus 2.82 MMT in February. This sign that grain exports have been largely uninterrupted by political unrest in the region is adding to pressure on wheat today.
  • Gulf SRW wheat basis is weaker at midday with April delivery down 2 cents and deferred delivery periods 1 cents lower.


Live cattle futures are moderately to sharply lower in nearby contracts, while deferred months are posting slight losses. Feeder cattle futures are moderately lower.

  • Traders continue to press cattle futures lower on expectations of lower cash cattle trade this week.
  • Adding to concerns to lower cash cattle prices is the slippage in the boxed beef market through yesterday.
  • However, wholesale beef is seeing some lift this morning. Choice boxed beef is 66 cents higher and Select boxed beef is 79 cents higher. Movement is a little better at 70 loads.
  • While this data could be read with a positive view, traders are generally ignoring it as they believe a top may have been made.
  • Supplies appear to be higher with showlists up slightly in Nebraska, Kansas and Texas and steady in Colorado this week. That should give packers more leverage in negotiations this week.
  • Packers have seen profit margins dip deep into the red this week, which increases their reluctance to pay steady prices.
  • However, nearby futures already hold a substantial discount to last week's cash cattle trade that took place from $150 to $152 on the Southern Plains and at $152 to $154 in northern locations.
  • Feeder cattle futures are lower on weakness in cattle futures and gains in corn prices.


Lean hog futures continue to hold moderate to sharp gains following a gap-higher open.

  • Short-covering continues to dominate trade today as April futures broke through the top of a two-week trading range to new highs.
  • Market momentum indicators suggest hog futures are heavily overbought. But the gap-higher opening today through recent resistance at $126.00 on the lead April contract reduces short sellers' willingness to hold positions. Traders will watch to see how the contract performs as it tests the gap today.
  • While Friday's Hogs & Pigs Report was viewed as bearish, traders are discounting the figures somewhat as not fully reflecting the impact of porcine epidemic diarrhea virus (PEDV).
  • April futures continue to find buying support from the $3-plus discount it holds to the cash hog index, which has moved above the $130 mark.
  • The pork cutout value retreated 27 cents this morning after surging $1.23 Monday. Movement remains on the light side at 143.62 loads.
  • Cash hog bids are mostly steady after yesterday's sharp selloff in futures. Profit margins have diminished for packers and some plants are thought to be scaling back kill hours due to scarce supplies.
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