Market Snapshot, Noon CT (VIP) -- March 28, 2014

March 28, 2014 06:53 AM
 

Corn futures continue to see fractional to 2-cent gains.

  • Position evening is dominating trade ahead of the weekend as traders look ahead to Monday's reports from USDA.
  • Traders expect the agency to peg 2014 corn plantings around 92.748 million acres. This would be the lowest figure in three years and a 2.7% reduction from 2013.
  • But in recent years the Grain Stocks Report has been the big market mover. Traders expect USDA to peg March 1 corn stocks around 7.099 billion bushels.
  • Meanwhile, reports Russia is increasing its military presence along Ukraine's border is mildly supportive. While grain shipments have thus far been uninterrupted, 2014-15 exports could be affected.
  • Spillover from the wheat market is also limiting buying interest in the corn market.

 

Soybeans are split at midday with old-crop 1 to 2 cents higher and deferreds posting losses of 1 to 5 cents.

  • Soybeans are seeing some bull spreading activity to wrap up the week as the market prepares from what is expected to be friendly old-crop and bearish new-crop data.
  • Traders expect USDA to peg March 1 soybean stocks at a tight 989 million bushels.
  • On the other hand, USDA is expected to peg 2014 soybean plantings at a record high 81.075 million acres.
  • Old-crop beans also remain supported by strong soybean export demand that has lasted much longer than anticipated.
  • Gulf basis firmed 2 cents for May delivery while other months held steady at midday.

 

Wheat futures continue to post losses in the teens across all three flavors with HRW leading to the downside.

  • Profit-taking pressed nearby SRW wheat contracts back below the $7.00 support level, triggering some technical sales.
  • Also, the forecast for rain in some areas of the Southern plains this weekend is pressuring the market. However, the south-central U.S. is expected to again see warm, windy conditions.
  • Traders are also focused on evening positions ahead of Monday's key reports. They expect winter wheat plantings to come in around 42.157 million acres, down 933,000 acres from 2013. Spring wheat acreage is expected at 12.27 million, up 674,000 acres from last year. All wheat plantings are expected to come in around 56.277 million acres.
  • March 1 wheat stocks are expected to be down 193 million bu. from year-ago at 1.042 billion bushels.

 

April live cattle have improved to post slight gains, but the rest of the market continues to post slight losses. Feeder cattle futures remain slightly to moderately lower.

  • Traders continue to book profits ahead of the weekend, encouraged by strong weekly gains and mild strength in the U.S. dollar index.
  • The front-month has benefited from some efforts to align it with the cash market. Last week, sales took place mostly around $152 to $154 -- notching record highs in both Nebraska and Kansas.
  • Light pressure stems from more signs boxed beef prices may be working on a top as Choice cuts plummeted $2.82 this morning, while Select fell 73 cents. Movement picked up a bit to 85 loads on the price break.
  • The pullback in the beef market has caused packer profit margins to fall back into the red. This adds to ideas cash cattle prices may pull back in the weeks ahead.
  • Adding to ideas beef prices are too high is a survey by the Wall Street Journal that showed the 15-cut average grocery price for all beef cuts rose 7 cents this week to $4.99 per pound. That is up 60 cents from year-ago and sharply above pork and chicken prices.

 

Lean hog futures remain mixed, with the front month slightly lower and deferreds moderately higher.

  • Lean hog futures continue to see a mix of followthrough buys and light profit-taking after a limit-higher close for most contracts yesterday.
  • Also making traders unwilling to extend long or short positions is the upcoming Quarterly Hogs & Pigs Report. Traders expect the report will show All Hogs & Pigs at 94.5%, Kept for Breeding at 99.6% and Kept for Marketing at 94.0% of year-ago levels.
  • The March 1 pig herd is expected to come in around 61.493 million head, down 5.5% from year-ago.
  • The lower expectations are reflective of concerns about the impact of the porcine epidemic diarrhea virus (PEDV) outbreak.
  • The National Animal Health Laboratory Network says 266 new cases of PEDV were confirmed the week ended March 22, bringing the total to 5,017 cases.
  • The pork cutout value rose a nickel this morning, but movement was again on the light side at 146.73 loads.
  • Strong gains in the cash market have not been matched by pork gains. As a result, packer profit margins have dipped into the red for some. This is resulting in mixed cash hog bids to wrap up the week.
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