Market Snapshot, Noon CT (VIP) -- March 27, 2014

March 27, 2014 07:00 AM

Corn futures continue to enjoy gains around 2 to 6 cents in most contracts.

  • The corn market continues to be supported by impressive weekly export sales of more than 1.408 MMT for 2013-14 and 28,400 MT for 2014-15, which topped expectations by a wide margin. Egypt, a value buyer, was the lead purchaser.
  • Exports of 1.23 MMT were also impressive and 29% above the prior four-week average.
  • But traders have thus far respected resistance at the top of the market's month-long consolidated trading range.
  • Traders are also readying for Monday's key USDA reports. Traders expect USDA to peg 2014 corn planted acreage around 92.748 million and for March 1 corn stocks around 7.099 billion bushels.
  • Traders brushed off news International Grains Council (IGC) expects the 2014-15 world corn crop to rise 2 MMT from the previous marketing year to record 961 MMT, as it says crop prospects are generally favorable despite unrest in the Black Sea region. Carryover stocks are expected to hit a 15-year high of 171 MMT.

Soybean futures have softened to trade 5 to 7 cents lower in old-crop contracts, while new-crop contracts are 2 to 4 cents lower.

  • Buying interest faded in the soybean market as traders shifted their attention to lackluster 2013-14 bean sales of 11,900 MT. This included cancellations of around 300,000 MT.
  • But sales of 534,900 MT for 2014-15 resulted in the overall tally topping expectations.
  • The soybean market is also being pressured by some spreading activity with the corn market, along with some profit-taking.
  • Traders are hesitant to actively extend long or short positions ahead of USDA's Prospective Plantings and Grain Stocks Report Monday.
  • Traders expect USDA to project 2014 soybean plantings around 80.075 million acres, up sharply from year-ago. But the Grain Stocks Report is expected to reflect tight March 1 stocks of around 989 million bushels.

Wheat futures have extended early gains to trade 11 to 14 cents higher in nearby SRW and HRW contracts, while HRS wheat is 7 to 10 cents higher.

  • The return of mild, windy conditions to the Southern Plains has traders again building some premium into prices.
  • Also, the Black Sea situation remains a source of underlying support, especially with U.S. lawmakers poised to increase sanctions on Russia.
  • Support also stems from this morning's weekly export sales data. Sales of 400,500 MT for 2013-14 and 327,500 MT for 2014-15 topped expectations. Also, exports of 530,400 MT were up 21% from week-ago.
  • Traders are also readying from USDA's reports Monday. They expect USDA to project all wheat planted acreage at 56.277 million, up marginally from 2013. Spring wheat acreage is expected at 12.27 million, up from 11.60 million last year.
  • March 1 wheat stocks are expected to come in at 1.042 billion bu. compared to 1.235 billion bu. last year.
  • Light support also stems from news IGC expects world wheat production to decline 9 MMT from 2013-14 to 700 MMT in 2014-15, with carryover stocks holding steady with year-ago at 190 MMT.

Live cattle futures have firmed to trade slightly to moderately higher. Feeder cattle futures are posting similar gains.

  • Traders have shifted gears a bit as they work to narrow the gap nearbys hold to the cash market.
  • While talk continues that cash trade above $150 is not sustainable, this week marks the fifth consecutive one where cash trade has taken place near or above this level.
  • This week, cash trade took place at $152 to $154 thanks to ongoing high beef prices and tight showlist numbers.
  • Today Choice and Select boxed beef values did pull back 96 and 27 cents, respectively. Movement was again light at 69 loads.
  • Beef export sales the week ended March 20 were solid at 13,300 MT for 2014, though a 100 MT net sales reduction was noted for 2015.
  • The bullish chart posture of the market and tight supplies continue to lift feeder cattle futures.

Lean hog futures have extended early gains to trade just off limit higher in nearby contracts, while far deferreds are posting moderate gains.

  • Lean hog futures gapped lower on the open yesterday, but this quickly gave way to "value" buying and futures ended high-range. The market is seeing strong followthrough buys today. The market appears poised for another test of contract-high resistance.
  • Despite near-limit gains, the April contract is still nearly $3 below the cash index.
  • Cash hog bids are mostly steady today as packers have seen profit margins diminish and there is some unease about just how high prices can rise. Already, some plants are trimming kill hours rather than paying up for limited supplies.
  • An 11-cent gain in the pork cutout value is also supportive. Traders are not overly concerned about movement of 158.32 loads as this is still relatively decent considering prices above $132 per cwt.
  • Traders are also more actively preparing for USDA's Quarterly Hogs & Pigs Report. Traders look for the report to show All Hogs & Pigs at 94.5%, Kept for Breeding at 99.6% and Kept for Marketing at 94.0% of year-ago levels.
  • There has also been some talk the H&P Report will not reflect the full impact of the porcine epidemic diarrhea virus since the number of confirmed PEDV cases has surged since the survey was issued in December.
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