Market Snapshot, Noon CT (VIP) -- April 7, 2014

April 7, 2014 07:11 AM
 

Corn futures remain under pressure, with most contracts near their lows for the day. Futures are 3 to 5 cents lower through the July 2015 contract.

  • Corn futures are lower on profit taking and position evening ahead of Wednesday's USDA update on supply and demand projections.
  • Futures reacted positively initially to this morning's strong weekly export inspections report which came in above expectations at 1,310,564 MT. Total inspections were down 24,465 MT from the previous week, however, but exceeded the top end of expectations by roughly 60,500 MT.
  • However, the inability of $5.00 to provide support for the lead May contract prompted additional profit-taking.
  • Traders are evening positions ahead of Wednesday's USDA Supply & Demand Report, in which they look for USDA to trim carryover. But projected carryover supplies will still be substantially larger than a year earlier.
  • A weaker U.S. dollar index is attempting to provide some support.
  • Trader concerns over late-planting are being eased by the forecast for a late-week warm-up in the Midwest. That has taken some of the wind out of the sails of new-crop futures.
  • Corn basis is steady to higher in the Midwest to start the week as farmers begin to ready for spring planting, slowing grain movement. Gulf corn basis is flat.

 

Soybean futures are lower with old-crop contracts leading declines. May futures are down 12 cents while new-crop contracts are off 7 to 8 cents.

  • After a brief bout of bull spreading, traders have reversed positions with old-crop futures leading declines.
  • Futures received only temporary support from this morning's positive weekly export inspections report, which came in slightly higher than expectations at 509,603 MT. The inspections figure was up 2,070 MT from the previous week.
  • Traders initially shrugged off news Brazilian beans arrived at the U.S. Gulf over the weekend, as this was largely expected. In fact, near-record soybean imports into the U.S. are expected for 2013-14. But traders have turned more negative on ideas USDA could increase projected carryover supplies due to even stronger-than-expected soybean imports.
  • Selling in new-crop contracts is being limited by USDA's announcement China purchased 120,000 MT of U.S. soybeans for 2014-15.

 

Wheat futures are favoring the upside with SRW wheat unchanged to 3 cents higher. HRW wheat 1 to 4 cents higher and HRS is mixed with an upside bias.

  • Wheat futures are slightly higher after prices hit three-week lows late last week and weekend rains on the Plains proved disappointing. However, more scattered rains are in the forecast, which also limits buying interest.
  • This morning's weekly export inspections report offered the market positive news showing actual inspections at 606,038 MT. This is up nearly 100,000 MT from the previous week and more than 56,000 MT above expectations.
  • Traders continue to prepare for the first national crop condition ratings of the spring this afternoon. But crop deterioration has been well documented via weekly state condition updates.
  • Russia's ag ministry says the country exported more than 2 MMT of grain last month, including nearly 1.3 MMT of wheat.
  • Russia's grain union head says the country may increase its grain exports to 25 MMT in the 2014-15 marketing year, in part due to the addition of Crimea.

 

Live cattle futures have firmed after trading weaker with the June through February 2015 contracts slightly higher. The lead April contract is 15 cents lower, however.

  • Live cattle futures continue to trade choppy after trading higher initially, then slipping into the negative and now moving back to the plus side.
  • Ideas a top has formed in both the wholesale and cash market is tempering trader willingness to pursue long positions.
  • Cash cattle were weaker last week with trading occurring at $148 to $150 in the Southern Plains, while trade took place at mostly $150 in Nebraska. This was down $2 to $4 from the bulk of trade the week prior.
  • Even with the weaker cash cattle, however, April live cattle futures are still about $6 below the low end of last week's cash trading range.
  • Traders are getting a mixed report from the wholesale beef market this morning. Choice boxed beef is 3 cents higher but Select beef is 88 cents lower. This follows a steep decline in the boxed beef market on Friday. Movement is lackluster at 73 loads, which follows decent movement of 166 loads on Friday. However, this is by no means considered strong movement.
  • Feeder cattle futures are weaker on profit-taking.

 

Lean hog futures are choppy with the May contract moderately lower and later contracts slightly to moderately higher.

  • Traders are hesitant to push futures prices strongly in either direction as they await more direction from both the wholesale and cash hog markets.
  • Traders continue to hold a bias that hogs have posted a major top, which is restraining their buying interest.
  • However, the expiring April lean hogs are moderately higher due to the $7 discount the contract holds to the cash hog index.
  • The cash hog market is steady to $1 lower as packers have responded to supplies tightened by the porcine epidemic diarrhea virus (PEDV) by reducing kill hours.
  • But futures are finding support from a stronger wholesale market this morning, which has the pork cutout value trading $1.10 higher. This morning's gain follows a 92-cent uptick on Friday. Movement continues to be slow, however, at 114.18 loads.
  • The stronger pork cutout value and reduced kill hours has pushed the packer margin back into the black, which is seen as a positive.
  • Deferred contracts are getting a lift on a continuation of spread unwinding.
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