Market Snapshot, Noon CT (VIP) -- March 18, 2013

March 18, 2013 07:04 AM
 

Investors have a risk-off attitude to start the week amid concerns with a Cyprus bailout agreement that will tax bank deposits. Given the macro-economic concerns, risky assets such as commodities and the stock market are under pressure, while the U.S. dollar is higher.

 

Corn futures have trimmed losses to trade mostly 1 to 2 cents lower.

  • Some of the pressure from outside markets is easing as the U.S. dollar has backed off gains from earlier in the day.
  • But given a lack of bullish news, corn will struggle to poke above unchanged unless there's a wave of fund-led buying.
  • Weekly export inspections were slightly above the top end of the guess range at 15.399 million bu., which has helped trim losses.

 

Soybean futures are 17 to 20 cents lower through the August contract, while September beans are around a dime lower and new-crop contracts are mostly 3 to 9 cents lower.

  • A broad-based, risk-off attitude continues to weigh on soybean futures as investors react to the Cyprus bailout deal that was tentatively reached over the weekend. But the market has not extended losses since mid-morning, suggesting the Cyprus news is "in" the market for now.
  • Additional pressure is coming from expectations the export of Brazilian soybeans will pick up soon and limit demand for U.S. soybeans. This is leading to active unwinding of bull spreads.
  • Weekly soybean export inspections were lighter than anticipated at 8.927 million bu., but that's above the "required" pace. Still, traders take it as a signal export demand for U.S. soybeans will fade seasonally.
  • Central Argentina was hit with frost over the weekend, but avoided a killing freeze. Still, there may have been some minor crop damage.

 

Wheat futures continue to trade at levels seen earlier this morning. Chicago wheat is mostly 10 to 14 cents lower, Kansas City wheat is mostly 6 to 10 cents lower and Minneapolis wheat is mostly 10 to 11 cents lower.

  • Negative outside markets continue to weigh on wheat futures as traders are taking a risk-off stance to start the week. The U.S. dollar has backed off earlier highs, but remains higher. Traders are concerned a stronger dollar could slow the recent pickup in export demand for U.S. wheat.
  • Weekly wheat export inspections were within the guess range at 23.947 million bushels.
  • Additional pressure is coming from the recent increase in precip across the Plains, which is giving the HRW crop a boost as it greens up. The crop will need more timely precip through spring, but crop concerns have eased for now.

 

Live cattle futures are showing a mixed tone, with the lead-month April contract firmer and deferred contracts under light pressure. Feeder cattle have turned slightly weaker at midday.

  • Buying interest remains limited to mild short-covering in live cattle amid a broad risk-off movement and ongoing demand concerns.
  • Boxed beef prices are slightly higher this morning, but packers moved only 79 loads of product. As a result, demand concerns continue to hang over the market. Unless the boxed beef market strengthens in price and movement, packers will be reluctant to pay steady to higher prices for cash cattle compared with last week's $127 trade in the Plains.
  • After favoring a firmer tone through much of the morning, feeder cattle have softened. The earlier short-covering interest has dried up, moving focus back to concerns about cash feeder cattle demand.

 

Lean hog futures remain under light pressure at midday.

  • The general risk-off attitude today continues to hang over the hog market, keeping futures under pressure. As a result, traders continue to take a prove-it attitude when it comes to the start of a seasonal rally in the cash hog market and in lean hog futures.
  • With that said, futures continue to trade at a premium to the cash index and there isn't a lot of selling interest today, suggesting traders feel seasonal strength will eventually develop.
  • Cash hog bids are steady to weaker across the Midwest on limited packer demand. Most plants are bought ahead on slaughter needs and are working to improve margins.
     
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