Market Snapshot, Noon CT (VIP) -- April 8, 2014

April 8, 2014 07:01 AM
 

Corn futures continue to trade higher with old-crop contracts up 2 to 5 cents and new-crop contracts 1 to 2 cents higher.

  • Nearby May futures have moved back above the important $5.00 support zone, indicating traders are unwilling to press prices lower until more is known about near-term demand.
  • Prices were under pressure early on news China has officially cleared the way for large-scale Brazilian corn imports. However, traders reacted only mildly as the bulk of this news had already been factored into prices.
  • Weakness in the U.S. dollar index is adding support to corn futures.
  • Prices are seeing some pressure from news the U.S. ag attaché in China expects the country to import 4 MMT of corn in 2013-14, 1 MMT lower than USDA's official forecast due to "biotech-related trade disruptions." But such shipping disruptions are well known.
  • Traders continue to even positions ahead of tomorrow's Supply & Demand Report. Traders expect USDA to lower its corn carryover estimate by 53 million bu. from last month to 1.403 billion bushels.
  • Spot bids for corn are generally steady to firmer in the Midwest this week thanks to slow movement as farmers ready for spring. Gulf bids are also steady.
  • Weather forecasts are providing a mixed message for traders as they call for warmer temps as the week progresses this week. But they also include chances for widespread frost for the Midwest early next week.

 

Soybean futures continue to trade higher with old-crop contracts up 7 to 10 cents and deferred contracts generally 6 cents higher.

  • After an early bout of selling, soybean futures trimmed losses and are solidly on the plus side today.
  • Bull spreading is back in force as traders balance tight old-crop carryover projections versus a strong boost in 2014 planting.
  • Futures are also gaining support from losses in the U.S. dollar index.
  • Position evening ahead of USDA's Supply & Demand Report is underway as well. Traders look for a friendly report tomorrow. They expect USDA to lower its ending stocks estimate by 6 million bu. from last month to 139 million bushels.
  • The forecast for a return of cold temps next week is limiting buying interest in new-crop contracts, as extended corn planting delays would help beans hold onto expected record-high planted acreage.
  • Basis is mostly steady across the Midwest.

 

Wheat futures firmed ahead of midday to post slight gains in nearby contracts.

  • Profit-taking and position evening ahead of tomorrow's USDA reports has given way to some mild bargain buying.
  • Weakness in the U.S. dollar index is positive.
  • While the start of the national weekly crop condition information was delayed by USDA to today, traders did have data from several state reports to digest. As expected, these showed ongoing HRW wheat crop condition declines. But traders believe this is largely factored into prices.
  • Traders continue to even positions ahead of tomorrow's April Supply & Demand Report, which will incorporate the March 1 stocks data that came in larger than expected. Traders look for 2013-14 wheat carryover to rise by around 25 million bu. to 583 million bushels.
  • Russian wheat exports rose to 1.5 MMT for the first two months of 2014, versus 331,000 MT during this period last year.
  • Russia's second largest grain trader is in negotiations to become a wheat supplier to Egypt's state grain buyer.

 

Live cattle futures have improved to post slight gains after a mixed start. Feeder cattle futures have also improved to mixed trade.

  • Nearby live cattle futures continue to find buying support from the wide discount they hold to last week's cash cattle trade at $148 to $150 in the Southern Plains.
  • But buying interest is limited as traders expect cash cattle trade will take place at lower prices again this week as packer margins are well in the red and showlists are up.
  • The boxed beef is providing the market some market support this morning. USDA reports the value of Choice beef rose 69 cents, while the value of Select beef climbed $1.68. In addition, movement improved to 79 loads.
  • News Australia and Japan reached a trade agreement that could shift some beef export business away from the U.S. if it does not also reach an agreement with Japan is pressuring deferred futures.
  • The firmer live cattle futures and weaker U.S. dollar are lifting nearby feeder cattle futures despite slight gains in the corn market.

 

Lean hog futures are down sharply with losses ranging from $1.60 to the $3.00 limit.

  • Profit taking and continued disappointment about slow wholesale pork movement have hog futures sharply lower.
  • The pork cutout value firmed 75 cents this morning, but movement remains slow at just 159.12 loads. Traders continue to read the slow movement as a sign of a top in the wholesale market.
  • Traders are also reacting to the $1 and $2 lower cash hog bids from packers. They have trimmed kill hours to push up wholesale pork prices and reduce losses as they face negative cutting margins. This will make them cautious buyers going forward.
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