Market Snapshot, Noon CT (VIP) -- April 9, 2013

April 9, 2013 06:50 AM
 

Corn futures continue to enjoy gains of mostly 3 to 9 cents with the May contract leading gains.

  • While last month's Quarterly Grain Stocks Report spurred a sharp selloff in futures, basis levels around the country have remained historically strong as farmers are unwilling to sell at lower prices. That's supporting May corn futures.
  • Gulf basis action is also indicative of some potential bargain buying by exporters. It firmed 2 cents for immediate delivery this morning and midday Gulf basis rose another 1 to 2 cents for near-term delivery.
  • The weather is a mixed bag. While precip in the western Corn Belt today with more on the way is beneficial for replenishing dry soils, the wet weather, chilly temps and chances for snow later this week point to a slow start to the U.S. corn planting season.
  • Traders have brushed off news Brazil's government raised its corn crop estimate by 1.35 MMT to a record-large 77.45 MMT, as a big South American crop is already "in" prices.
  • Traders are also reducing risk ahead of USDA's Supply & Demand Report tomorrow.

 

Old-crop soybean futures are enjoying gains of 6 to 14 cents, while new-crop contracts are around 2 to 3 cents higher.

  • Old-crop beans are benefiting from concerns prices dropped too far after last month's bearish grain stocks report, especially considering still relatively tight old-crop supplies.
  • Gulf basis levels rose 2 to 6 cents this morning and they were steady to 2 cents higher for near-term delivery at midday, signaling some export buys may be occurring.
  • Plus, South American supplies have yet to flood the market due to shipping delays. As a result, China's first quarter soybean imports are expected to total just 11.48 MMT, down 1.79 MMT from year-ago.
  • News Brazil's Conab trimmed its production estimate for 2012-13 from 82.1 MMT to 81.9 MMT due to a drop in its yield estimate is being mostly ignored, as this still represents a record crop.
  • China National Grain and Oils Information Center lowered its Chinese soybean import forecast for 2012-13 to 59 MMT. The 1-MMT reduction from the month prior was due to decreased soymeal demand due to bird flu and weak hog prices.
  • New-crop beans are being pressured by expectations precip (including snow) in the Corn Belt could delay corn plantings and shift acres to beans.
  • Traders are also readying for the Supply & Demand Report that's expected to show a 12- million-bu. increase in carryover from March.

 

Kansas City and Minneapolis wheat futures are enjoying slight gains in most contracts while Chicago wheat remains roughly 3 to 5 cents lower.

  • The Pro Farmer weighted Crop Condition Index reveals the HRW wheat crop deteriorated 3 points to 274 on the 0 to 500 point scale last week. This is supporting Kansas City wheat futures.
  • The SRW crop, on the other hand, improved 9 points to 371. This is weighing on Chicago wheat futures.
  • Light support also stems from snow in the forecast for the Northern Plains and late-week chances for freezing temps as far south as Texas' northern panhandle.
  • But countering this is focus being placed more so on a 2-percentage-point increase in the amount of wheat rated "good" to "excellent" in yesterday's winter wheat condition report than on a 2-percentage-point increase in the amount of wheat rated "very poor."
  • Traders are also readying for the Supply & Demand Report tomorrow, which is expected to show a 15-million bu. increase in carryover from last month.
  • Gains in the corn market and a weaker U.S. dollar index are also limiting selling interest.

 

Live cattle futures are enjoying slight to moderate gains in all but far-deferred contracts, which are mixed. Feeder cattle futures are narrowly mixed.

  • Nearby contracts are at a discount to last week's cash cattle trade, which is encouraging light short-covering today.
  • Showlist estimates are tighter this week, but the boxed beef market's struggles are tempering any expectations for higher trade.
  • A late snow event for the nation's northern tier and chilly temps does not bode well for an increase in grilling demand, though this could also stress livestock.
  • This morning, Choice boxed beef prices rose 14 cents and Select values firmed 37 cents. But movement was again light at just 69 loads.
  • Outside markets are also supportive of commodity buying as the U.S. dollar index is under pressure, while crude oil futures and the stock market are firmer.
  • Feeder cattle traders are weighing spillover from live cattle against firmer corn prices.

 

April lean hogs remain slightly higher, while the rest of the market is posting slight losses.

  • Recent cash market strength continues to support the April contract as it signals demand for pork is expected to improve soon.
  • Today, however, packers are keeping bids mostly steady to lower as they work to improve negative cutting margins. The pork market must confirm improving demand for the market to put in a low.
  • Concerns about pork exports are weighing on deferred contracts. U.S. Meat Export Federation analysis of USDA data showed pork exports in February were down 5% from last year to 178,510 MT and the value of the exports declined 6% from year-ago to $494.6 million.
  • Weakness in the U.S. dollar index is limiting pressure.
     
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