Market Snapshot, Noon CT (VIP) -- March 3, 2014

March 3, 2014 06:16 AM
 

Corn futures have trimmed strong early gains to trade steady to 3 cents higher.

  • Corn futures soared at the start of day trading on fears of military action in Ukraine as such action could slow grain exports from the world's No. 3 corn exporter.
  • Spillover from wheat is also supportive.
  • The burst higher came despite a surge in the value of the U.S. dollar index as traders rushed toward safe-haven investments in the face of the uncertainty in the Crimea area.
  • Support also stems from signs of strong export demand. USDA announced Japan purchased 211,500 MT of U.S. corn -- 47,000 MT for 2013-14 and 164,500 MT for 2014-15. The department also announced South Korea bought 140,000 MT of old-crop U.S. corn.
  • USDA followed up with strong weekly export inspections report showing inspections in excess of 1.055 MMT. The tally was well above expectations and last week's tally.
  • March corn futures soared to their highest level since Sept. 17, but have since trimmed those early gains on profit-taking and are testing support near $4.62.
  • Gulf basis is steady in late-morning trading.

 

Soybean futures have turned negative after a strong opening. The front three contracts are 5 to 7 cents lower and deferred contracts are mixed with a downside bias.

  • March soybean futures gapped higher and rallied on spillover strength from wheat and corn futures. The strong start was triggered by worries over military action in the Ukraine.
  • However, futures have since fallen back, filling the opening gap and are trading near their lows of the day. The stronger U.S. dollar has traders on the defensive and taking profits.
  • Traders turned negative on USDA's weekly export inspections totaling "only" 984,181 MT. That figure was down 328,498 MT from last week and shy of expectations.
  • Early support came on news China's Ministry of Commerce modestly raised its forecast of the country's soybean imports for February from 5 MMT to 5.05 MMT. However, it also expects imports to drop to 3.49 MMT in March.
  • Gulf soybean basis are steady at midday.

 

Wheat futures have pared early gains to trade 12 to 30 cents higher on worries about military action in Ukraine.

  • Wheat futures gapped higher on the open thanks to concerns about the possibility of military action in Ukraine. The nation is a major exporters of both corn and wheat.
  • In addition, bitter cold is raising concerns about the possibility of winterkill in some areas of Nebraska and Kansas where snowcover is lacking.
  • Meanwhile in the Southern Plains, precip chances remain limited, keeping dryness concerns in mind as spring emergence nears.
  • The gap-higher opening triggered buy stops in March SRW futures above the $6.00 resistance area. Followthrough buying carried the contract to its highest level since Dec. 12. Futures have since trimmed early gains but are holding above support at $6.20.
  • March HRW wheat futures soared through resistance from $6.80 to $6.90 to trade at their highest market since Nov. 6. Traders trimmed those early gains, but futures continue to trade in the upper third of today's wide range.
  • USDA reports weekly wheat export inspections totaled 609,867 MT, which is up 127,437 MT from the week prior and higher than expected.
  • Gulf basis is steady at midday.

 

Live cattle futures are mixed this morning with April futures down more than $1 but other contracts slightly weaker to marginally higher. Feeder cattle futures are moderately to sharply lower.

  • Strength in corn futures and the U.S. dollar index has traders taking profits despite the sharp discount between futures and cash cattle prices.
  • April futures have moved to more than a $6 discount to last week's record-setting cash $150 cattle trade in the Southern Plains and even farther below trade at $152 in Nebraska (also a record).
  • The boxed beef market continues to provide support. Choice beef jumped another $3.56 and Select soared another $4.46 this morning. Movement is on the light side at 82 loads, however.
  • Packer cutting margins have improved but still remain in the red.
  • Meanwhile, another week of frigid temperatures will again slow weight gain. Traders are waiting for this week's showlist estimates to form cash opinions.
  • Feeder cattle futures are lower on strength in corn prices and the U.S. dollar index.

 

April lean hogs futures continue to trade higher in a volatile trading range. Deferred contracts are mixed.

  • Strong cash hog prices prompted April futures to gap higher and soar to an all-time high. Profit-taking then set it. Futures slumped to fill the gap but have since moved higher.
  • The pork cutout value rose slipped 29 cents this morning and movement was light at 130.24 loads. However, pork should continue to benefit from high beef prices.
  • Packer kill margins remain in the black, despite weather that has kept cash prices steady to higher.
  • Most packers are paying up for supplies again today as bitter cold is making producers unwilling to market hogs.
  • Meanwhile, the porcine epidemic diarrhea virus (PEDV) remains an underlying source of support as there is uncertainty about just how much the virus will tighten supplies.
  • There are some concerns that tensions between the U.S. and Russia due to the situation in Ukraine could derail plans for Russia to resume importing U.S. pork that is free of ractopamine.

 

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