Market Snapshot, Noon CT (VIP) -- March 22, 2013

March 22, 2013 06:55 AM
 

Corn futures continue to post losses around 8 to 9 cents in old-crop futures, while new-crop is roughly 3 to 4 cents lower.

  • Softer Gulf basis levels signal the recent rally in corn and dollar strength have trimmed export demand. Gulf basis fell a penny for April delivery at midday.
  • Basis around the country has also softened, signaling the recent runup encouraged some farmer selling.
  • Adding to demand concerns, Argentina's ag ministry estimates the country will produce a record-large 26.5 MMT corn crop. This led to the government approving an additional 2 MMT of corn for export in 2012-13.
  • New-crop futures are also facing pressure due to a reminder that production is expected to rebound in 2013. Informa Economics reportedly expects corn plantings of 97.753 million acres for 2013. This would be a 598,000-acre rise from 2012.
  • Prospects for the coming growing season are gaining more attention as USDA's Prospective Plantings Report is on tap next Thursday.

 

Soybean futures have moved off their lows to trade 7 to 8 cents lower in old-crop beans and double-digit lower in new-crop.

  • Soybean traders are booking profits ahead of the weekend after the market posted strong gains yesterday.
  • The market remains uncertain about when port congestion in Brazil will be sorted out and a flood of bean supplies onto the market will slow demand for U.S. soybeans.
  • Adding to demand concerns, Argentina's ag ministry forecasts 2012-13 bean production will be a near-record 51.3 MMT.
  • Countering this, however, are expectations China's soy imports may slip below 4.5 MMT for April after falling to just 3.77 MMT in March due to Brazilian shipping delays. China National Grains & Oils Information Center estimates monthly crush needs at 4.8 MMT.
  • Informa Economics reportedly expects 2013 soybean planted acreage of 78.457 million, which would be up 1.259 million acres from the year prior. This added pressure to new-crop beans.

 

Wheat futures remain under pressure with Chicago and Kansas City wheat mostly 4 to 6 cents lower and Minneapolis wheat mixed.

  • A storm that is expected for the Plains this weekend is making it tough for wheat to find buyers, as this is favorable for drought relief. Meanwhile, Minneapolis wheat is benefiting from concerns about the impact of frigid temps on the Northern Plains.
  • Adding to the negative tone, Informa Economics reportedly expects all wheat plantings of 56.074 million for 2013, which would be up 338,000 acres from 2012. This includes plantings of 12.364 million acres for spring wheat, which is up 75,000 acres from last year.
  • UkrAgroConsult expects Ukraine to increase its grain export forecast by 26% to 27 MMT due to expectations for a record-large crop of more than 53 MMT in 2013-14.

 

Live cattle futures continue to post losses ranging from slight to moderate. Feeder cattle futures are split amid bull spreading.

  • Cash cattle trade is thought to be largely complete after light trade the past few days at $124 to $125 -- down $2 to $3 from the week prior.
  • A generally lackluster performance in the boxed beef market was to blame for softer cash prices. This morning, Choice cuts slid 81 cents and Select fell 20 cents. Just 74 loads changed hands. This widened the premium Select values hold to Choice cuts.
  • Traders are also working to limit their risk exposure ahead of the weekend and this afternoon's Cattle on Feed Report, which is expected to show all categories well below year-ago levels.
  • Weaker corn prices and a softer U.S. dollar index is also supportive for nearby feeder cattle contracts.
  • Frozen beef stocks at the end of February are expected to come in at 475.9 million lbs., which would be down 1.7% from the previous month but up 1.1% from last year.

 

Lean hog futures continue to post slight to moderate losses ahead of midday.

  • Cash hog bids are steady to $1 lower again today as packers are having no trouble securing supplies for next week. Average hog weights have been on the rise in recent weeks and a number of plants will be closed next Friday.
  • The pork cutout value did improve yesterday, widening packer profit margins. But the fact that this slowed movement to just 34.13 loads is keeping demand concerns close at hand.
  • Pork movement picked up this morning, however. Already, 26.25 loads changed hands.
  • Plus, traders are concerned lackluster pork demand will be reflected in this afternoon's Cold Storage Reports. Traders expect frozen pork stocks at the end of February to come in at a record-high 637.5 million lbs., which would be a 5.3% increase from the month prior and 8.1% above the five-year average.
  • But ideas the market is due for a bounce, especially with spring approaching, is limiting pressure on nearby futures.
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