Market Snapshot, Noon CT (VIP) -- April 2, 2014

April 2, 2014 06:59 AM
 

Corn futures have turned sharply lower, posting losses of 4 to 10 cents with old-crop contracts leading declines.

  • Profit-taking has swept into the market after recent strong gains and on an absence of news.
  • A stronger U.S. dollar index is adding to today's selling pressure.
  • Reports of increased farmer selling on the surge above $5.00 by futures are also contributing to today's weakness.
  • Profit-taking has also moved into the new-crop contracts, but concerns about continuing cold temperatures along with forecasts for snow over portions of the Midwest, which will further delay the start of planting are providing support to those new-crop contracts.
  • Traders are shrugging off reports private analytical firm Agroconsult reduced its Brazilian corn crop estimate by 1.4 MMT yesterday to 71.2 MMT.
  • Ethanol production the week ended March 28 rose 37,000 barrels per day (bpd) to 922,000 bpd. Ethanol stocks rose 222,000 barrels to 15.88 million barrels.

 

Soybean futures are 6 to 13 cents lower in old-crop contracts, with May leading the decline. New-crop futures are 2 to 7 cents lower.

  • Soybean futures are lower on profit-taking and spillover weakness in both the corn and wheat markets after a firmer opening.
  • Technical traders increased their selling after May soybeans failed to surge through the key $15.00 resistance level.
  • A stronger U.S. dollar index is also contributing to today's negative tone.
  • The market initially benefited from news late yesterday Agroconsult cut its Brazilian soybean crop estimate by 2.3 MMT to 86.9 MMT. But that support has since faded.
  • Brazil's trade ministry says bean exports jumped from 2.79 MMT in February to 6.23 MMT in March thanks to strong Chinese demand, which was seen as a negative by traders as it raises concerns of U.S. sales cancellations.
  • Soybean oil, which had benefited from increased talk about lawmakers possibly retroactively extending the biodiesel tax credit, has slipped lower in the front months as the fate of the tax legislation in the House is uncertain.

 

SRW and HRW wheat futures continue to fall, with most contracts posting losses in the teens.

  • Profit-taking and technical-based selling are pressing futures lower this morning.
  • Increased chances for spring rains in winter wheat country are weighing on the market along with a stronger U.S. dollar index.
  • Meanwhile, news out of the Black Sea regions indicates grain shipments have remained on track, disappointing traders who looked for a decline in shipments due to tensions in that region.
  • Also, the market feels HRW wheat crop condition declines have been factored into prices.
  • Spillover pressure from the corn market is adding to the selloff in wheat today.

 

Live cattle futures continue to trade slightly higher, with the exception of the lead April contract that is slightly lower. Feeder cattle futures are moderately higher.

  • While traders expect cash cattle trade to take place at lower prices this week, April futures are already at least $5 below the low end of last week's cash cattle trade.
  • The wholesale beef market is providing support today as Choice boxed beef is quoted $1.31 higher and Select beef $1.34 higher. Movement is a solid 96 loads.
  • However, traders are looking for cash trade to take place at lower levels due to the wide negative margins packers face. Yesterday, a few hundred head of cattle changed hands in Nebraska at $150 -- down $2 to $4 from trade in the region last week.
  • Feeder cattle futures are higher on the selloff in corn prices.

 

Lean hog futures are sharply lower on profit-taking and fund liquidation. Summer contracts are seeing losses near $2.00.

  • Hefty profit-taking and fund liquidation have hog futures trading sharply lower.
  • Losses in the nearby April contract are being limited by the discount they hold to the cash hog index.
  • The selloff is occurring even as wholesale pork prices rose this morning, rising $1.11. Movement was positive on the rise in prices at 240.88 loads.
  • Packers are still enjoying profitable cutting margins and cash hogs are mostly steady as a result.
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