Market Snapshot, Noon CT (VIP) -- March 31, 2014

March 31, 2014 07:07 AM
 

Corn futures quickly reversed course after USDA report data. Most contracts are 7 to 9 cents higher.

  • Heading into USDA's 11:00 a.m. CT reports, con futures were trading sharply lower, but futures quickly firmed in reaction to USDA's bullish data.
  • USDA report farmers plan to plant 91.691 million acres to corn this spring, more than a million acres below the average pre-report trade guess and, if realized, down 3.674 million acres from 2013.
  • Meanwhile, corn stocks as of March 1 came in at 7.006 billion bu., which implies usage in the latest quarter was higher than traders expected.
  • May corn futures are working on a bullish reversal after posting a daily low of $4.75 1/2. The contract is challenging the $5.00 level ahead of midday.
  • December corn is working on a bullish reversal and has moved to its highest level since Sept. 30.

 

Soybean futures are mixed amid bull spreading, with old-crop posting gains of 6 to 21 cents and new-crop 6 to 9 cents lower.

  • Trader reacted to today's reports with active bull spreading.
  • Soybean stocks as of March 1 came in around 3 million bu. above the average trade guess at 992 million bu., which is still 6 million bu. tighter than year-ago. This is supporting old-crop futures.
  • Meanwhile, USDA says farmers intend to plant around 81.5 million soybean acres this spring, which is around 500,000 acres above the average trade guess. If realized, it would be a record and would be up nearly 5 million acres from 2013.
  • Meanwhile, AgRural lowered its Brazilian soybean production forecast by 300,000 MT to 85.6 MMT, which is also supportive for old-crop futures.
  • May soybean futures have seen trade below support at Friday's low and the contract is currently pivoting around Friday's high to remain in the upper bounds of the choppy, month-long trading range.
  • November soybean futures have moved off the daily low of $11.65 1/2, but the contract is still working on a big downside day of trade on the chart.

 

Wheat futures have moved well off session lows after the reports, but SRW and HRS wheat are maintaining a negative bias while HRW has turned narrowly mixed.

  • This morning's March 1 wheat stocks figure of 1.056 billion bu. came in around 14 million bu. above traders' expectations, but the figure is still down from 1.235 billion bu. last year at this time.
  • More focus is being placed on the acreage data, which revealed farmers intend to plant 55.815 million acres to the 2014 wheat crop, which is below the average trade guess of 56.277 million and below year-ago of 56.156 million bushels.
  • Winter wheat acres (which is set) came in a little below traders' expectations of 42.007 million and is down from 43.09 million a year-ago.
  • Spring wheat acres of 12.009 million came in below the average guess of 12.27 million and helped to bring HRS futures off their daily lows. Last year farmers planted 11.595 million acres to the spring wheat crop.
  • Rain in the forecast for winter wheat country is limiting buying in the wheat market, although the driest areas of the western region have again missed out on showers.
  • Tensions in the Black Sea region are also helping to limit selling.

 

Live cattle futures have moved off session lows, but remain slightly to moderately lower at midday.

  • Choice beef values softened a penny this morning and Select declined $1.22 on light movement to start the week.
  • Traders are keeping a very close eye on the beef market to start the week to determine packer demand after they paid $152 to $154 for cash supplies last week.
  • There are concerns about packers trimming kill hours to adjust for tighter supplies and to deal with margins that have again tightened.
  • Weakness in the hog market is adding pressure to live cattle futures this morning.

 

April lean hog futures are moderately lower, with the rest of the market sharply to limit lower.

  • Traders are reacting to Friday's Hogs & Pigs Report that showed most categories coming in more robust than traders expected.
  • This morning's lower-than-expected corn stocks figure provides more evidence the H&P Report is in the ballpark.
  • But there is a discrepancy in the slaughter pace and the weight breakdowns, which suggests USDA did not catch all the losses from the PEDV outbreak.
  • Meanwhile, pressure on the front-month contract is being limited by the $4 discount it holds to the cash hog index, which continues to climb.
  • Pork cutout values softened 54 cents this morning on moderate movement.
  • The cash hog market is mostly steady, but a few locations have lowered bids, which raises ideas more packers will be trimming kill hours to adjust for tighter supplies and margins.
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