Market Snapshot, Noon CT (VIP) -- March 19, 2013

March 19, 2013 06:59 AM
 

Outside markets have turned price-negative as investors seek safe-haven investments on fears the Cyprus parliament will not pass the controversial bailout package unveiled over the weekend. The U.S. dollar index is posting sharp gains and crude oil has weakened.

Bull spreading continues to dominate action in the corn market, with May and July futures up around 5 cents. Deferred futures are down 1 to 3 cents.

  • The tight availability of old-crop supplies is lifting May and July corn futures, with additional support coming on spillover from wheat futures.
  • An improved near-term technical outlook is also feeding on itself in old-crop corn contracts. May corn tested $7.30 earlier and is trading mid-range, but is still above yesterday's high.
  • Buying interest in new-crop corn futures remains limited as traders are anticipating a sharp rebound in production this year. An active weather pattern is also contributing to expectations for improved moisture prospects for the upcoming growing season.

 

May soybeans are 3 cents higher, with July pivoting around unchanged and August 2 cents lower. New-crop contracts are 6 to 8 cents lower.

  • May beans are finding support from the tight old-crop stocks situation, but strength in the dollar index is limiting buying.
  • While shipping delays continue to mount at Brazilian ports, news that a Chinese soybean buyer has canceled around 2 MMT of Brazilian soybeans due to shipping delays has traders uncertain about the country's demand needs. It's unknown if the firm will turn to the U.S. to fill its near-term needs.
  • Gulf soybean basis is unchanged from this morning -- steady to 5 cents lower for nearby shipment -- which signals demand for old-crop beans has softened.

 

Chicago wheat is mostly 5 to 8 cents higher, with Kansas City up 2 to 7 cents. Minneapolis wheat is leading the way with gains of 7 to 8 cents.

  • Traders are working to correct spreads with corn, as May Chicago wheat is still trading at a discount to May corn.
  • But unless fresh demand news surfaces, the upside for wheat will be limited to corrective trade. Traders recognize that demand for U.S. wheat has upticked recently, but a constant flow of demand news is needed to keep bulls interested.
  • HRW crop ratings modestly improved in the Southern Plains over the past week. But with the crop greening up, moisture requirements will rise and there's little rain in the near-term forecast.

 

Live cattle futures have weakened to trade slightly to moderately lower; feeder futures remain under pressure.

  • Concerns about beef demand and packers' demand for cash supplies this week are causing traders to widen the discount April live cattle hold to last week's $127 cash cattle trade.
  • This morning, Choice boxed beef values have slipped 16 cents and Select is up 52 cents on lackluster movement of 76 loads.
  • This week's cattle showlist is up slightly from last week, which will make packers less willing to bid up for cash cattle, especially if boxed beef movement doesn't strengthen.
  • Feeder cattle futures are seeing spillover from live cattle, as well as pressure from strength in nearby corn futures.
  • Negative outside markets are contributing to selling ahead of midday.

 

Lean hog futures have extended losses to trade slightly to moderately lower.

  • Lean hog futures extended losses as the dollar strengthened, as it raises concerns about export demand.
  • Additionally, the lingering cold spell raises concerns grilling season will start later than usual, adding to concerns about domestic demand.
  • The cash hog market is mostly steady in western locations, while steady to weaker bids are being reported in eastern areas. Packer demand is light across the Midwest despite some travel disruptions caused by the latest wintery weather blast.
  • April lean hog futures are trading at around a $2 premium to the cash index, which opens additional near-term downside risk.
     
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