Market Snapshot, Noon CT (VIP) -- March 25, 2014

March 25, 2014 07:07 AM
 

Corn futures continue to trade 1 to 4 cents lower.

  • Profit-taking following yesterday's gains continues to dominate trade today.
  • The mild setback has not done any technical damage other than suggesting the $4.90 on May futures is a growing resistance area.
  • Strength in the U.S. dollar index is adding to the negative tone.
  • The market is shrugging off the intended planted acreage figures released Informa Economics. The firm cut its corn acreage estimate to 93.029 million acres, down from its previous projection of 93.319 million acres. If achieved that acreage figure would be a 2.4% cut from 2013.
  • But the acreage projection from Informa reminds traders of the pending barrage of reports due Monday from USDA. That's when the agency releases its Prospective Plantings and Quarterly Grain Stocks Report.
  • Traders are a little nervous about the rise in corn prices possibly reducing demand due to news Taiwan again passed on a tender for U.S. or South American corn.
  • Concerns are easing about the potential for spring planting delays due to the forecast for warmer temperatures in the Corn Belt next week.
  • Gulf corn basis is steady at midday trading.

 

Soybean futures have moved to the plus side after a choppy trade earlier this morning. Futures are 4 to 5 cents higher.

  • A slight cut in projected planted soybean acreage by Informa Economics has soybean futures edging higher after a choppy start.
  • The firm projects planted soybean acreage will be 81.204 million acres, down slightly from its previous estimate of 81.264 million acres. If achieved, this would represent a 6.1% rise versus 2013 -- an increase already built into market expectations.
  • Traders are starting to look ahead to the release of the Prospective Plantings and Quarterly Grain Stocks Reports due Monday from USDA.
  • The stocks report will keep focus on the tight supply situation for soybeans, but the plantings report will shift more of the market's focus to the upcoming 2014 crop.
  • May futures are nearing resistance at $14.40.
  • Futures saw some pressure early on ideas Chinese bean demand may slow due to negative crush margins and bird flu.
  • Traffic has returned to normal at Argentina's Rosario port following dredging of the main waterway running into it. This suggests shipments could soon increase from this port.
  • Gulf soybean basis is 4 cents weaker for immediate delivery while basis levels are steady for all remaining delivery periods.

 

Wheat futures have turned 1 to 4 cents lower after a brief uptick in midmorning trading.

  • Wheat futures are back testing their lows for the day following the release of spring planting intentions by Informa Economics. It projects U.S spring wheat plantings will rise 200,000 acres from its previous forecast to 12.298 million acres. If achieved, this would represent an increase of 6.1% from a year ago. The firm left its durum acreage estimate unchanged and raised its winter wheat acreage estimate by 650,000 acres.
  • Strength in the U.S. dollar index is also encouraging profit-taking today.
  • The situation in Ukraine continues to provide support as traders look for tensions to eventually disrupt grain shipments. So far, the shipment pace has remained normal.
  • SovEcon has raised its 2014 Russian grain crop forecast by 2 MMT to 88 MMT. The firm expects Russian grain exports of 22 MMT in 2014-15.
  • The market is finding some support from yesterday's crop condition reports which show conditions continue to deteriorate for the HRW crop. The amount of wheat rated "poor" to "very poor" stands at 55% in Texas, 42% in Oklahoma and 21% in Kansas.
  • Gulf basis for HRW and SRW wheat is steady at midday.

 

Live cattle futures are slightly higher with the exception of the April and June contracts. Feeder cattle futures are slightly to moderately higher.

  • Cattle futures are choppy with light bear spreading underway.
  • Contracts are gaining support from the wide discount nearby contracts hold to last week's cash cattle trade at $150 to $152. Early asking prices in the Southern Plains are at $152 -- up $2 from the bulk of trade in the region last week.
  • Nearby futures are feeling some pressure from today's weaker wholesale beef trade. Choice boxed beef is 39 cents lower while Select beef is down $1.10. Movement continues to be light at 60 loads.
  • Showlist estimates are up a net 2,000 head this week, which is a marginal increase over last week's limited supplies.
  • Heavy losses in the hog market are keeping traders cautious toward the long side of the cattle market, however.
  • Feeder cattle futures are finding support from the weaker corn market.

 

Lean hog futures continue to post sharp losses after gapping lower on the open, with several contracts limit lower.

  • Hog traders have jumped to the sell side as futures stagnated Monday and gapped lower today.
  • The plunge has broken the steep March uptrend line. The market was heavily overbought and due for a correction.. The more sustainable February-March uptrend line provides support at about $9 under current levels in the April contract.
  • Pressure is coming from the $2.01 drop in the pork cutout value this morning. The decline comes on improved movement of 188.32 loads.
  • The drop in the front-month contract along with the surge in the cash market have shifted the April contract to a more than a $3 discount to the cash index.
  • Packers are again paying steady to higher prices for market-ready hogs as some stockpiling in anticipation of shortages related to the porcine epidemic diarrhea virus (PEDV) are anticipated in the months ahead.
  • RaboBank forecasts PEDV will cause a 6% to 7% decline in U.S. pork production this year. The situation is well known and is considered factored into prices.
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