Market Snapshot, Noon CT (VIP) -- March 24, 2014

March 24, 2014 07:05 AM
 

Corn futures are 6 to 10 cents higher in old-crop contracts and 3 to 6 cents higher in new-crop contracts.

  • Strong export inspections have corn futures moving higher again this morning.
  • Weekly corn export inspections came in at 1,142,722 MT. That was up 165,980 MT from the previous week and near the top end of expectations.
  • Traders are also working to build some fear premium into prices due to rising tensions in the Black Sea region. Russia has upped its presence in Ukraine and the West is working to strengthen its response to the situation. The unrest in the Black Sea region could eventually bring some grain export business to the U.S.
  • The market easily brushed off news earlier today that China rejected a 21,800-MT of U.S. corn because it contained the unapproved MIR 162 strain (Syngenta's Viptera). Traders view the tonnage involved as small and the issue is not new.
  • Traders were also encouraged early by Taiwan's tender for up to 60,000 MT of corn sourced from the U.S. or South America. The order signals importers still find U.S. prices attractive.
  • Traders are shrugging off the stronger U.S. dollar index as a result.
  • Cash traders report basis levels are firmer across the interior of the Midwest due to lack of farmer selling.
  • Gulf basis is steady for most delivery periods at midday with the exception of a 1-cent higher bid for April delivery.
  • New-crop futures are finding support from the return of snow and cold weather for the Midwest with more in the forecast this week. Traders view the weather as increasing odds of a late spring planting season.

 

Old-crop soybean futures are posting double-digit gains, while new-crop contracts are 1 to 5 cents higher.

  • Old-crop futures have moved higher since seeing a positively viewed Weekly Export Inspections Report and thanks to spillover from both corn and wheat.
  • While demand for U.S. soybeans has remained strong longer than anticipated, weak economic data out of China raises concern this could change. Plus, concerns about negative crushing margins and bird flu slowing soy demand remain close at hand.
  • However, the Weekly Export Inspections Report came in at 732,132 MT today. While that figure is down 218,753 MT from the previous week, it is within trade expectations and suggests the export window is still wide open.
  • Technical traders continue to take heart the front May contract found solid buying support at the psychological $14.00 mark.
  • Gulf soybean basis is steady at midday after a stronger start this morning. The May delivery period is seeing a 2-cent decline, however.

 

Wheat futures continue to pace gains with double-digit marks in all three flavors and all contracts. Nearby futures are leading gains with gains around or over 20 cents.

  • Rising tensions in the Black Sea region over the weekend and strong export inspections have wheat futures sharply higher.
  • Traders are giving today's weekly export inspections report a positive read. The report came in at 524,857 MT. That was up 28,461 MT from the week prior and within pre-report trade expectations.
  • The export inspections report shows U.S. prices are still competitive, and uncertainties over shipping capabilities out of the Black Sea trump mild dollar strength.
  • Russia says it exported 19.786 MMT of grain from July 1 through March 19, a 40.8% increase over year-ago. Its ag ministry forecasts 2013-14 grain exports at 22 MMT, which compares to 15.69 MMT the previous season.
  • Increasing worries about drought conditions in the Central and Southern Plains are also supporting prices. Current forecasts hold only limited precip chances for the region.
  • Gulf HRW wheat basis is steady at midday with SRW wheat basis steady for the March through May and August delivery periods. Basis is 1 cent higher for June and July delivery.

 

Live cattle futures continue to trade mixed with nearby contracts slightly firmer and deferred months slightly lower. Feeder cattle futures gapped higher on the open and continue to post gains.

  • Futures are absorbing Friday's reports with the result being nearbys are finding support while deferreds are finding some selling pressure.
  • The Cattle on Feed Report is somewhat negative to the third quarter at it showed Placements at 115% of year-ago levels, which is well above expectations. However, the On Feed and Marketings came in as expected.
  • But the Cold Storage Report is providing near-term support as it shows frozen beef stocks at the end of February at 407.103 million lbs., down 5% from the month prior and 17% below year-ago.
  • The boxed beef market is firmer this morning, as well, with Choice beef up 35 cents and Select beef up $1.40. Movement is a slow 55 loads, however.
  • The front-month April contract continues to find support from the nearly $6 discount it holds to the low-end of last week's cash cattle trade at $150. Trade took place at $2 higher prices at all locations.
  • Packer margins have again dipped into the red after a brief period in the black.
  • Feeder cattle futures are benefiting from Friday's reminder of tight calf supplies.

 

Lean hog futures continue to mark sharp losses in all but the March and far-deferred contracts, which are seeing more moderate losses.

  • The parabolic run-up in lean hog futures may be coming to an end. The April contract is currently testing support at Friday's low. A dip through that area will break the ultra-steep uptrend line and could attract followthrough selling.
  • Most contracts are still well overbought according to both the 9- and 14-day Relative Strength Index, signaling an additional pullback is warranted.
  • The market is also under pressure from Friday's Cold Storage Report that showed frozen pork stocks at the end of February up 6% from the month prior (though February is a shorter month) and 3% above year-ago.
  • This adds to concerns about retailer resistance to near-record high pork prices.
  • Today's pork cutout from USDA adds fuel to those worries. It declined $1.03 this morning and movement is a very slow 89.94 loads.
  • On the other hand, the cash market remain strong as packers are still enjoying profitable margins despite the recent tightening in margins. They are paying steady to $2 higher prices for cash hogs to start the week.
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