Market Snapshot, Noon CT (VIP) -- March 6, 2014

March 6, 2014 06:17 AM
 

Corn futures continue to post gains of 2 to 9 cents with March futures leading gains.

  • Strong export sales confirmed by USDA this morning have corn futures moving higher. May futures have marked new highs for 2014 and are trading at their highest level since early September 2013.
  • Triggering the upswing was this morning's Weekly Export Sales Report, which showed corn sales of 1.518 MMT for 2013-14 and 164,500 MT for 2014-15, which was well above expectations and 35% above the prior four-week average. Exports in excess of 1.138 MMT were also impressive.
  • The strong sales suggest the surge in corn prices have not yet curbed demand.
  • The corn market is also gaining support from a weaker U.S. dollar index and spillover support from soybean futures.
  • Technical traders note nearby contracts have found technical support at the 200-day moving average after moving above this level this week for the first time in more than a year.
  • Gulf corn basis is 1 cent firmer for March delivery, 3 cents higher for April delivery and steady for deferred delivery periods.

 

Soybean futures are 4 to 16 cents higher with old-crop futures leading gains.

  • Confirmation of strong exports sales and continuing shipping problems out of Brazil have soybean futures moving higher.
  • This morning's weekly export sales of 772,700 MT for 2013-14 and 256,700 MT for 2014-15 topped expectations by a wide margin. In addition, China was again the lead export recipient for strong soybean exports of nearly 1.174 MMT.
  • The trade is beginning to price in even higher levels of purchases from China as that country continues to buy rather than cancel previous orders as expected. That situation may change once Brazil breaks through its logistics log jam, but it extends the export window for U.S. soybean longer than previously expected.
  • Soymeal export sales were also impressive for the week ended Feb. 27 at 232,800 MT for 2013-14 and 35,800 MT for 2014-15.
  • Argentina's grain exchange raised its soybean production estimate by 1.5 MMT to 54.5 MMT.
  • Gulf soybean basis has moved to unchanged for March through May delivery at midday. Basis has weakened 3 cents for June delivery, is unchanged for July delivery and 1 cent lower for August delivery.

 

Wheat futures are fractionally to 3 cents higher for all flavors except the soon-to-expire March HRS contract, which is nearly 40 cents higher.

  • Wheat futures are enjoying some spillover support from the generally stronger tone across the commodity sector.
  • The March HRS contract has soared nearly 40 cents higher, which is lifting the May contract.
  • The overall technical picture for wheat futures remains friendly despite the abundance of wheat supplies globally.
  • Traders await direction on exports from Ukraine, but officials state shipments are flowing as scheduled but private sources report farmer selling is constrained due to the devaluation of Ukraine's currency.
  • The market is finding light support from news the Food and Agriculture Organization of the United Nations (FAO) in its first 2014-15 global wheat crop forecast pegged the crop at 704 MMT, down 1.7% from 2013-14.
  • Support also stems from this morning's Weekly Export Sales Report, which showed sales of 556,100 MT for 2013-14 and 44,400 MT for 2014-15. The tally was up sharply from last week.
  • Weekly wheat exports of 633,100 MT were up 16% from the previous week, with Brazil the lead destination.
  • Gulf SRW wheat basis is 5 cents higher for March delivery at midday. It is steady for April and May delivery, and steady to 1 cent higher for June and July delivery and unchanged for August delivery.

 

Live cattle futures are slightly to moderately lower. Feeder cattle futures are posting moderate losses.

  • Light profit taking continues today in followthrough from the bearish key reversal posted in April futures yesterday.
  • April futures are trading near their lows of the day, but have not yet filled the upside gap left Feb. 26 which starts at $142.60.
  • The downturn comes as cash cattle trade in Texas and Kansas continues at $148, which is $2 lower than the previous week. Trade at $150 in Nebraska is also $2 lower than the previous week.
  • The decline comes despite tighter showlists and surging beef prices.
  • But packers continue to cut in the red and have reduced kill lines in an effort to improve margins.
  • However, the $5 discount April futures hold to Southern Plains prices is limiting the selloff.
  • Wholesale beef prices continue to surge with Choice up $1.29 this morning and Select beef $1.14 higher. Movement is a light 62 loads, however.
  • Strength in corn and soybean futures plus the weakness in live cattle futures are pressing feeder cattle futures lower.


April lean hog futures are more than $2 higher, while deferred months are posting slight to sharp gains.

  • Ongoing strength in wholesale pork along with firmer cash hog prices has hog futures favoring the upside in narrow trading.
  • April futures have traded in a narrow range well inside of yesterday's broad price range.
  • Bullish traders view yesterday's price setback after scoring new highs as a chance to get on board the bull train, but others counter the market is heavily overbought.
  • Wholesale pork prices edged higher this morning. The pork cutout rose 3 cents and movement was a relatively light 151.45 loads.
  • Cash hog bids are steady to higher due to tight supplies and strong demand. Packers continue to cut well in the black.
  • Concerns over tightening supplies due to PEDV continue to provide underlying support for the market.
  • Weakness in the U.S. dollar index is also supportive but strength in grain futures is a damper.
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