Market Snapshot, Noon CT (VIP) -- March 28, 2013

March 28, 2013 06:59 AM
 

May and July corn futures have moved their 40-cent limit lower in reaction to USDA's bearish grain stocks data, with new-crop futures 20-plus cents lower.

  • Traders had a sharp and quick bearish reaction to USDA's Quarterly Grain Stocks Report. The report showed corn stocks of 5.4 billion bu. as of March 1, which came in well above the average trade guess of 5.03 billion bushels. This reflects more price rationing has occurred than traders anticipated.
  • Meanwhile, traders nailed the planted corn acreage figure of 97.3 million. While this is getting a neutral read from traders, new-crop corn futures are seeing spillover from limit losses in old-crop contracts.
  • Traders have put this morning's weekly export sales on the back burner. The report showed sales of 295,100 MT for 2012-13 and 18,900 MT for 2013-14, which met expectations. This is an 88% increase in old-crop sales relative to the four-week average, but the overall export pace remains sluggish.

 

Old-crop soybean futures are mostly 40-plus cents lower in reaction to the bearish grain stocks data, with new-crop futures posting losses in the teens to 20s.

  • USDA report data got a bearish read by the market, with old-crop contracts leading losses as the stocks data points to more price rationing than expected.
  • USDA pegs March 1 soybean stocks at 999 million bu., which came in 52 million bu. higher than traders expected.
  • Meanwhile, the Prospective Plantings Report is a positive development for new-crop futures, as it shows producers plan to plant 77.1 million acres to soybeans this spring -- coming in below traders' expectations of 78.5 million.
  • While the acreage data is bullish for new-crop futures, those contracts are having a difficult time gaining upward momentum and refueling the acreage battle due to sharp pressure on old-crop futures.
  • Traders have put the weekly export sales data on the backburner for now. The report showed sales of 66,400 MT for 2012-13 and 607,700 MT for 2013-14, which met expectations. China accounted for the vast majority of these new-crop bean buys, reminding traders of the country's seeming insatiable appetite for 2013-14 crop corn.

 

Wheat futures are seeing sharp spillover pressure from neighboring pits and from the bearish grain stocks data. Wheat is 30- to 40-plus cents lower at all three exchanges.

  • On top of spillover from neighboring pits, wheat futures are being pressured by USDA's bearish grain stocks data that showed wheat stocks as of March 1 above expectations at 1.23 billion bushels. Traders expected stocks to come in slightly below year-ago levels, but instead stocks came in above the year-ago tally of 1.199 billion bushels.
  • Traders nailed the all wheat acreage projection of 56.4 million planted acres for 2013. This compares to 55.7 million planted in 2012.
  • Planted spring wheat acreage at 12.7 million came in 200,000 acres above the average trade guess, but well within the range of guesses.
  • The weekly export sales data is now of traders' minds, but it serves as a reminder that usage has improved recently. Weekly export sales of 580,300 MT for 2012-13 and 248,300 MT for 2013-14 came in well above expectations and signal U.S. wheat is competitive on the global market.
  • Traders are also readying for the restart of weekly condition ratings next week, which will give the market a better idea as to the state of the HRW crop that went into dormancy with the worst rating on record.

 

Live cattle futures are moderately higher while feeder cattle futures are sharply to limit higher in reaction to weakness in the corn market.

  • Stepped up buying in the feeder cattle pit is being seen in reaction to sharp losses in corn futures. August feeder cattle futures have moved their $3 limit higher.
  • Higher cash cattle trade is supporting live cattle futures this morning. Cash cattle trade is wrapping up in the Plains, with sales in Texas at $127 to $128 and $128 in Kansas, which compares to trade at mostly $124 to $125 last week.
  • Meanwhile, boxed beef prices are under pressure, with Choice values slipping $1.25 to $188.71 per cwt. and Select down 46 cents to $188.05 per cwt. The good news is lower prices are spurring improved movement.
  • Another positive demand development came from the weekly sales report, which showed net beef sales of 17,300 MT for the week ended March 21 -- up 13% over week-ago and up 5% from the four-week average.

 

Lean hog futures are mixed amid bull spreading ahead of the Hogs & Pigs Report.

  • Nearby lean hog futures are finding support from strength in the cash hog market, as some scattered higher bids signal packers are short bought heading into next week.
  • But deferred futures are under light pressure as traders even positions ahead of this afternoon's Quarterly Hogs & Pigs Report. The report is expected to show All Hogs & Pigs at 100.7% of year-ago levels. The pig-per-litter category is expected to come in at 101.1% of year-ago.
  • Nearby lean hog futures are also being supported by spillover from live cattle.
  • The market appears unconcerned that April hogs are trading at around a $6.50-plus premium to the cash index. This suggests the tide has turned as retailers should soon begin to feature pork.
  • But if packers' focus turns to improving profit margins next week, it would open the door for fresh downside risk.
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