Market Snapshot, Noon CT (VIP) -- March 1, 2013

March 1, 2013 05:59 AM
 

Corn futures remain split with old-crop futures fractionally to 2 cents higher and new-crop futures mostly 3 cents lower.

  • Traders continue to even positions ahead of the weekend as fresh news is lacking today.
  • Signs of improved export demand in recent weeks is giving bulls an edge in old-crop futures as carryover supplies are very tight.
  • In contrast, expectations for a large 2013-14 corn crop are giving bears a slight advantage in new-crop corn, though the crop has yet to be seeded. Recent precip in the Corn Belt is encouraging of this.
  • Marked dollar strength and a risk-off attitude amid sequester uncertainties is also limiting buying interest across the commodity sector.
  • Informa Economics reportedly expects USDA next week to peg the Brazil corn crop at 71.6 MMT (up 1.3 MMT from last month) and the Argentine crop at 25 MMT, unchanged from last month. Expectations for a large South American crop are already known.

 

Soybean futures are back near session lows with old-crop futures posting losses in the teens and new-crop futures fractionally to 8 cents lower.

  • A reminder of expectations for record-large South American bean supplies to soon hit the market caused the soybean market to soften.
  • Informa Economics reportedly expects USDA to raise its Brazil soybean production estimate by 0.5 MMT from last month to 84.5 MMT. The firm left its Argentine soybean production estimate at 51 MMT.
  • Strength in the U.S. dollar index is adding to pressure on soybean futures ahead of the weekend.
  • It appears traders view still-strong Chinese bean buys as factored into prices as today's news of a new-crop Chinese bean purchase of 120,000 MT failed to spark buying interest. Traders expect such buys to soon slow.

 

Wheat futures are the upside leader today with Chicago wheat around 7 to 9 cents higher, and Minneapolis and Kansas City roughly 2 to 13 cents higher.

  • Wheat futures have thus far exhibited impressive resilience in the face of spillover pressure from soybeans and marked strength in the U.S. dollar index, as traders work to correct wheat/corn spreads.
  • Traders are covering short positions amid ideas the downside was overdone last month -- especially considering recent signs export demand is improving.
  • Adding to the positive tone is news the Home Grown Cereals Authority says that soggy soils in recent months means 10% of the UK's winter wheat crop could fail.
  • All of this is outweighing recent beneficial precip on the Central and Southern Plains with more in the forecast.
  • Also limiting gains, Ukraine will begin exporting wheat in April as it will have around 2 MMT of exportable supplies in positions by then.
  • China also announced it will sell 1.285 MMT of wheat next week to cool domestic prices.

 

Live cattle futures are enjoying slight gains in most contracts at midday, while feeeder cattle futures are slightly to moderately higher.

  • Moderate cash cattle trade took place yesterday at mostly $128 to $129 on the Southern Plains. But support from these sharp price gains for cash cattle is limited by the fact that the April contract is already at a $1 premium to the top end of this range.
  • Firmer cash cattle trade was brought on by lighter supplies due to stress from the winter storm event as well as tighter showlists and signs the boxed beef market has put in a low.
  • But a bit of uncertainty exists regarding the product market as higher prices have slowed movement. This morning Choice cuts rose $1.33, but Select values slipped 51 cents on movement of 87 loads.
  • Concerns about eventual meat inspector furloughs and dollar strength due to the sequester are also limiting factors.
  • Feeder cattle futures continue to benefit from corrective short-covering, with improvement in the corn market limiting gains.

 

Lean hog futures continue to enjoy slight gains ahead of midday.

  • Lean hog futures are benefiting from some light short-covering amid ideas the downside has been overdone this week.
  • But buying interest otherwise is limited by ongoing weakness in the pork and thus cash hog market.
  • The pork cutout value softened yesterday and movement slowed. Concerns about pork demand has resulted in packers planning a lighter kill this week and paying steady to lower prices for cash hogs.
  • Nevertheless, traders do expect to see some product market improvement soon as retailers beginning stocking up on hams for Easter and warmer weather will soon encourage consumers to fire up their grills.
  • Buying in the April lean hog contract is also being limited by the around $2.50 premium it holds to the cash hog index.
  • Dollar strength is also limiting gains in the livestock sector.
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