Market Snapshot, Noon CT (VIP) -- April 5, 2013

April 5, 2013 07:04 AM
 

Corn futures remain under light pressure with old-crop contracts fractionally lower and new-crop down mostly 3 to 4 cents.

  • Broad risk-aversion is setting the tone to wrap up the week thanks to a disappointing labor market report this morning.
  • But pressure is being limited by weakness in the U.S. dollar index and news of a 120,000-MT corn purchase to an unknown destination for 2013-14. This signals prices may have reached value levels that spark demand.
  • Gulf basis rose a penny for May delivery this morning, signaling more such demand news may be ahead.
  • A chilly and wet forecast for major corn producing states over the next 10 days is also limiting pressure as this points to planting delays.

 

Old-crop soybean futures are double-digit lower while new-crop beans are down 4 to 9 cents ahead of midday.

  • Traders are focused on reducing risk ahead of the weekend as the technical situation for soybeans suffered damage this week and there are concerns about export demand for U.S. soybeans going forward in light of a large South American crop coming available.
  • But a 6-cent surge in Gulf basis for immediate delivery at midday could signal some bargain buying is occurring. Concrete signs prices are boosting export demand are needed for beans to put in a low.
  • The Chinese bird flu scare is also a source of pressure as this could limit demand over the near-term. The overall impact of this is likely overstated, however.
  • Ideas corn planting delays are likely is adding to the negative tone for new-crop beans as this could translate to higher bean plantings than USDA survey work indicated.

 

Wheat futures have improved to mostly firmer trade, with Kansas City futures leading the price recovery.

  • Wheat is enjoying some light short-covering ahead of the weekend, encouraged by weakness in the U.S. dollar index. Traders are unwilling to be caught short ahead of another reminder of the poor state of the winter wheat crop Monday.
  • Precip prospects for the HRW wheat belt are mixed. While substantial precip is expected in the next five days for the area, the 6- to 10-day outlook calls for average rain chances, and the extended outlook calls for below-normal rain chances.
  • Forecasts for chilly temps and snow in the northern Plains are encouraging light short-covering in Minneapolis wheat futures.
  • Wheat needs concrete signs demand is improving to put in a low. There has been talk of Chinese purchases this week, but nothing has been confirmed.

 

Live cattle futures are slightly to moderately lower. Feeder cattle futures are seeing losses ranging from slight to sharp levels.

  • A risk-off stance after a disappointing jobs report this morning is weighing on cattle futures as this adds to existing beef demand concerns.
  • In addition, softer boxed beef prices have drawn down packer profit margins, which could diminish their willingness to pay up for tightening cattle supplies going forward.
  • This morning, boxed beef prices were little changed with Choice down 3 cents and Select up 4 cents, but movement was notably light at just 59 loads.
  • Chilly temps and snow in the forecast for some parts of the northern U.S. could further delay the seasonal spring grilling rally in beef prices.
  • Beef demand concerns translate to limited demand for feeder calves.

 

Lean hog futures have weakened to trade moderately to sharply lower.

  • Selling has picked up in the lean hog market after most contracts' gap-lower start.
  • A shaky labor sector raises concerns about meat demand going forward.
  • Meanwhile the pork product market continues to sputter. Yesterday, the voluntary report for the pork market showed the cutout value down 33 cents on light movement of 27.75 loads. In the mandatory report, the pork cutout value slid $1.32 on movement of 445.5 loads.
  • Declines in pork prices and the fact that packers have paid up for supplies this week have pulled cutting margins into the red. Thus, they are keeping bids mostly steady today.
  • Light pressure also stems from the nearly $2 premium the April lean hog contract holds to the cash hog index with a week remaining until its expiration. The May contract is at nearly a $9 premium to the index.
     
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