Market Snapshot, Noon CT (VIP) -- March 21, 2013

March 21, 2013 06:57 AM
 

Corn futures remain split with old-crop down a cent and new-crop fractionally to 2 cents higher.

  • A quiet news day is leaving traders to engage in some light bull spread unwinding.
  • This morning's Weekly Export Sales Report reminded traders of generally tepid export demand. Sales of 92,200 MT for 2012-13 and 183,300 MT for 2013-14 fell short of expectations.
  • Also, Gulf basis slid this morning and at midday for near-term delivery. This signals the recent rally may have encouraged farmer selling.
  • But traders are also engaging in some technical short-covering as the May contract appears to have turned the 200-day moving average into support after closing above that level yesterday.
  • Similarly, December corn settled above the 40-day moving average yesterday and the contract is seeing some followthrough buying today.

 

Soybean futures continue to enjoy gains in the teens for old-crop futures, while new-crop beans are mostly around 7 to 8 cents higher.

  • Uncertainty about the U.S. supply situation and efforts to correct the technically oversold condition of the market is supporting soybean futures today.
  • The U.S. export window for beans has remained open longer than usual, thanks to shipping delays in Brazil. This has likely drawn down already tight carryover supplies.
  • But supplies are expected to soon come available. Brazil's soybean harvest is thought to be about half complete while harvest in Argentina is getting underway.
  • The market learned that China plans to sell between 1 MMT and 1.5 MMT of state soybean reserves to crushers due to shipping delays in Brazil. While this could eventually translate to additional Chinese bean buys from the U.S. or South America to replenish stocks, it will likely limit crushers' urgency to book export supplies over the near-term.
  • Also, weekly export sales were highly disappointing at 107,800 MT for 2012-13 and 234,000 MT for 2013-14.

 

Wheat futures continue to post losses around 3 to 5 cents at all three locations.

  • Risk aversion and limited direction from the corn market is encouraging profit-taking in wheat today.
  • Weekly export sales of 484,500 MT for 2012-13 and 88,800 MT for 2013-14 fell well short of lofty expectations. This also heightens concerns that dollar strength will limit wheat's attractiveness on the global export market.
  • Precip is expected in winter wheat country over the next few days, which is also giving bears the near-term advantage.
  • Countering this, however, are far less favorable 30- and 90-day weather forecasts relative to drought relief.
  • News Ukraine's head state weather forecaster expects the country's winter wheat production to rebound to 18 MMT to 19.5 MMT from 14 MMT in 2012 adds light pressure.

 

Live cattle futures have improved to post slight to moderate gains in all but the October contract, which is slightly lower. Feeder cattle futures are sharply higher.

  • Live cattle futures are enjoying some light short-covering on ideas a near-term low is in place and that an upside correction is needed.
  • Some additional cash cattle sales took place this morning in Texas at $125, in line with $124 to $125 trade earlier this week but below last week's mostly $127 action.
  • This morning, Choice boxed beef values fell $1.41 and Select slipped $1.13. This did encourage strong movement of 100 loads, however.
  • Traders remain hopeful that spring grilling will give the beef market a boost, though the near-term forecast calls for continued chilly temps.
  • The market is also relieved that meat inspector furloughs will be avoided.
  • Early short-covering in the feeder cattle market amid ideas the downside has been overdone has triggered buy stops, accelerating gains.

 

Lean hog futures have improved to moderately higher trade through the July contract, while deferred months are slightly lower amid bull spreading.

  • Spillover from live cattle and ideas the downside has been overdone are giving the lean hog market a boost.
  • Traders are also hopeful expansion in China's manufacturing sector will point to improved pork export demand.
  • Traders are brushing off yesterday's slide in the pork cutout value and are instead focusing on the fact that the pork market is due for a seasonal rally as grilling season arrives.
  • This may take some time to occur, however, as the near-term forecast calls for below-normal temps across the U.S. next week.
  • Recent declines in the product market and limited demand has resulted in mostly steady cash hog bids today.
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