Market Snapshot, Noon CT (VIP) -- March 6, 2013

March 6, 2013 06:02 AM
 

Old-crop corn futures posted new session lows ahead of midday with old-crop contracts 9 to 17 cents lower and new-crop corn down 4 to 7 cents.

  • Traders are focused on reducing risk ahead of USDA's Supply and Demand Report Friday, with dollar strength giving bears the upper hand.
  • Pre-report expectations are for USDA to raise its U.S. carryover estimate from 632 million bu. in February to 649 million bu., as traders expect USDA to cut its export and feed usage projections.
  • Somewhat offsetting this are expectations for USDA to trim its world carryover estimate by 170,000 MT from last month to 117.87 MMT.
  • Also in focus will be USDA's South American production projections. Traders expect USDA to cut its Argentine estimate by 1.4 MMT to 25.6 MMT and for it to raise its Brazil production estimate a touch to 72.6 MMT.
  • Recent precip in the Corn Belt with more in the extended forecast add to ideas U.S. production will rebound in 2013-14, pressuring old-crop futures.
  • Adding to the negative tone, U.S. ethanol production slid 1% last week to 805,000 barrels per day, though ethanol stocks also fell marginally (0.1%) to 19.4 million barrels.

 

Soybean futures are enjoying gains of 1 to 4 cents with the exception of the front-month and far deferred contracts, which are slightly lower.

  • Soybean futures have seen volatile action this morning as early losses gave way to some bargain buying. Spillover from corn and wheat and a lack of fresh export demand news is keeping a cap on bullish enthusiasm.
  • Light support also comes from expectations USDA on Friday will trim its carryover supplies peg by 3 million bu. to 122 million bushels as historically high prices have yet to curb export demand.
  • Shipping delays in Brazil have kept the U.S. export window open longer than normal.
  • The U.S. ag attaché in Brazil has lowered its estimate of the country's soybean crop to 82.5 MMT. Traders expect USDA on Friday to peg the Brazil bean crop at 83.4 MMT (little changed from last month) and for it to cut its Argentine production estimate by 2 MMT to 51 MMT.
  • But buying enthusiasm remains curbed by recent improvement in Midwest soil moisture reserves and expectations South American supplies will eventually curb U.S. soy exports.

 

Wheat futures have softened to trade double-digit lower in most contracts at all three locations.

  • Recent rains in HRW wheat country are encouraging selling in the wheat market.
  • Plus, the market remains within a well defined downtrend and the dollar is enjoying strong gains. This gives traders technical-based incentive to sell.
  • Also, traders are readying for USDA's Supply and Demand Report that is expected to favor market bears. Pre-report expectations are for USDA to raise its carryover estimate by 22 million bu. from last month to 713 million bushels.
  • Adding to the negative tone is news a ministerial panel in India will discuss a proposal for allowing an additional 5 MMT of wheat exports tomorrow.
  • Ukraine officials also plan to meet in April for a discussion on lifting the country's wheat export ban. Ukraine's ag minister says the country has exported 6.2 MMT of wheat this marketing year and will likely export another 500,000 MT before 2012-13 is complete.
  • Yesterday's larger wheat production forecasts for Australia add pressure.

 

Live cattle futures have backed well off their early lows to trade mostly moderately lower. Feeder cattle futures continue to post sharp losses.

  • Live cattle futures faced heavy followthrough selling this morning, which led to the start of cash cattle trade in Kansas and Texas at $128 -- steady with week-ago. April live cattle are at a slight premium to these cash prices.
  • Adding to the negative tone, Statistics Canada today released data showing that Canadian farmers had about 12.3 million head of cattle on their farms as of Jan. 1, which is up 0.5% from year-ago.
  • Pressure is being limited by another morning of sharp gains in the boxed beef market. Choice cuts firmed $2.08 and Select values rose $3.28, though movement was again light at 76 loads.
  • Dollar strength and recent major chart damage for a number of feeder cattle contracts is weighing on feeder cattle futures.

 

Lean hog futures have improved to mixed trade in nearby contracts, though deferred months remain slightly to moderately lower.

  • Hog futures have trimmed early losses thanks to mostly steady cash hog bids this morning.
  • Plus, Statistics Canada data shows that Canadian hog farmers had inventory of 12.7 million hogs as of Jan. 1, which is down 0.5% from last year.
  • But the pork market's struggle to put in a low continues to give bears the upper hand in the lean hog market. Yesterday, the pork cutout value fell $1.79, though this encouraged strong movement. Already this morning, 29.75 loads have changed hands.
  • Product market declines have eroded packer profit margins this week.
  • Buying interest is also being limited by the ongoing slide in the cash hog index. The front-month is currently at around a $1 premium to the cash hog index.
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