Market Snapshot, Noon CT (VIP) -- April 4, 2013

April 4, 2013 07:01 AM
 

Corn futures softened just ahead of midday to trade 9 cents lower in old-crop, while new-crop corn is marginally to 2 cents lower.

  • Last week's higher-than-expected grain stocks estimate from USDA continues to weigh on old-crop corn futures.
  • Funds have been heavy sellers of corn this week and dollar strength is encouraging some additional lightening of long positions.
  • Gulf basis declined 3 cents this morning for June delivery and 3 cents for July delivery at midday. This signals prices may have not yet dipped far enough to bring buyers back to the table.
  • This morning's weekly export sales of 354,300 MT for 2012-13 and 33,000 MT for 2013-14 met expectations and improved over week-ago. But the tally was not enough to excite market bulls.
  • And while Asian feed buyers have ramped up purchases this week, South America has been the primary recipient of this business.

 

Soybean futures are double-digit lower in old-crop contracts, while new-crop beans are mostly 7 to 10 cents lower.

  • Concerns there is more downside potential for the soybean market over the near-term along with strength in the U.S. dollar index is weighing on the soybean market.
  • Traders are also aware a large South American crop will eventually hit the market, slowing demand for U.S. beans.
  • This is overshadowing this morning's weekly export sales of 392,700 MT for 2012-13 and 355,100 MT for 2013-14, which topped expectations.
  • The bird flu situation in China has also raised concerns that the scare may reduce meat and poultry demand in China, and thus trimming crushing needs.
  • The market needs signs the price break has sparked bargain buying. While that news has so far been lacking, a 1-cent increase in Gulf basis for May delivery at midday could signals that may soon change.

 

While Kansas City wheat remains 7 to 8 cents lower, Chicago and Minneapolis have spent time in positive territory. These markets are currently slightly lower.

  • Wheat futures have moved well off their lows in Chicago thanks to concerns about the poor state of the winter wheat crop as well as yesterday's news that China has bought up to 10 cargoes of U.S. wheat due to quality concerns with the Canadian crop.
  • Kansas City wheat, on the other hand, is being pressured by the forecast for highly beneficial rains in the Central Plains next week.
  • This morning's weekly wheat sales report was disappointing. Sales of 141,200 MT for 2012-13 were a marketing-year low and when paired with sales of 174,800 MT for 2013-14, the tally fell well short of expectations.
  • Light support also comes from news UkrAgroConsult trimmed its 2013 Ukraine grain crop forecast by 1.5% to 52.4 MMT.

 

Cattle futures are slightly to moderately lower at midday.

  • The April live cattle contract is trading at a slight discount to cash cattle trade at mostly $128 on the Southern Plains yesterday.
  • The rest of the market is being pressured by concerns about beef demand in the face of a late start to spring relative to the past two years.
  • Plus, the market is unsure how consumers with less disposable income will respond to higher beef prices as cattle supplies tighten in the months ahead.
  • This morning, Choice and Select boxed beef cuts posted slight gains of 10 cents and 4 cents, respectively, but movement was light at 81 loads.
  • Meanwhile, strength in the U.S. dollar index and macroeconomic headwinds keep export demand concerns nearby. Beef export sales of 10,500 MT for the week ended March 28 declined notably from recent weeks.
  • Feeder cattle futures are being pressured by the sharp premium nearby contracts hold to the feeder cattle index.

 

April lean hog futures are more than a $1 higher, while the rest of the market is mostly slightly lower.

  • The front-month contract is benefiting from another day of gains in the cash hog market. Some locations are paying as much as $3 higher prices today. Traders appear unconcerned about the $4-plus premium April lean hogs holds to the cash index.
  • Deferred contracts are being pressured by the steep premium they will hold to the index when the April contract expires next week. The May contract is nearly $11.50 above the cash hog index.
  • Traders are also uncertain about demand. While spring usually brings a rebound in meat demand as consumers fire up the grill, a chilly start to the season is making traders cautious.
  • Pork prices have struggled to rise in terms of both prices and movement.
  • Strength in the U.S. dollar index is also weighing on the market as it diminishes the attractiveness of U.S. pork prices for exporters.
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