Market Snapshot, Noon CT (VIP) --Advice -- April 11, 2014

April 11, 2014 07:07 AM
 

Cotton producers: Increase old-crop cash sales… Old-crop cotton futures are signaling a top is in place and sharp near-term downside price pressure is possible. Therefore, hedgers are advised to finish 2013-crop sales by selling the final 25% of old-crop in the cash market. Cash-only marketers are advised to make a 15% sale to get to 90% sold on old-crop.

Technical action is still bullish for December cotton futures, so we'll wait on making additional new-crop sales for now. But be prepared to advance new-crop sales if technicals deteriorate.

Corn futures are 1 to 4 cents weaker with new-crop futures leading declines.

  • Traders are favoring the sell side of corn futures as they prepare for the weekend.
  • Little fresh news has moved into the market this morning, leaving technical traders watching the $5.00 mark in both the nearby May and December contracts for signs of buying support or rising resistance.
  • Weather forecasts are somewhat mixed, depending on your timeframe. The near-term forecast keeps ideas of planting delays alive. Rain is expected to move across the Midwest this weekend, followed by cold temperatures and potential frost. But looking farther ahead, forecasters see chances of a relatively benign weather pattern that will allow Midwest growers to rev up the planting pace.
  • The National Grain and Feed Association says Chinese rejections of U.S. corn shipments have totaled nearly 1.45 MMT, which is notably above the commonly reported 900,000 MT of rejections. The group says this has cost grain companies $427 million.
  • Interior corn basis is cited as steady on slow farmer sales. Gulf basis is also steady on light offerings.

 

Soybean futures continue to post losses ranging from 9 to 17 cents in the old-crop contracts and 8 to 12 cents in the deferreds.

  • Profit-taking continues to dominate trading as fresh news is lacking and traders even positions ahead of the weekend.
  • Traders continue to react to negative economic data out of China, which points to continued slowing in the economy. But others expect government stimulus to be announced if the slowdown becomes too pronounced, despite statements to the contrary by that nation's premier.
  • Traders note USDA announced another a 330,000-MT soybean sale to an unknown destination for 2014-15 this morning, which they suspect is China.
  • Traders are also digesting news a Cargill soy processing plant in Illinois will halt deliveries of beans next week due a a railcar shortage.
  • Egypt bought a total of 230,000 MT of wheat today from Russia, Romania and Ukraine.
  • Basis levels at interior points are listed as steady this morning as is basis at the Gulf.

 

Wheat futures are mixed to 1 to 2 cents higher.

  • Short-covering is the main feature today as SRW contracts found buying support at the 200-day moving average yesterday and today.
  • HRS wheat futures are leading gains on ideas sowing may be delayed due to forecasts for more precipitation and cold temperatures for that region.
  • HRW wheat is attracting short-covering on ideas current high temperatures in the southern High Plains followed by a major plunge to freezing temperatures will stress the crop.
  • Also, the Southern Plains are expected to miss out on much of the weekend precip.
  • Ideas the selloff in wheat futures has been overdone is also attracting some position evening ahead of the weekend.
  • Basis in HRW wheat country is steady this morning.

 

Live cattle futures continue to trade slightly to moderately higher through the October contract with slight losses posted in the December and deferred contracts. Feeder cattle futures are slightly lower.

  • Short-covering continues to lift nearby live cattle contracts as the traders continue to wait for cash cattle negotiations to begin.
  • However, most look for cash prices below last week's $148 to $150 action. However, futures have already built in a decline in cash prices.
  • Working against feedlot asking prices is higher showlist estimates, deeply negative packer profit margins and another sharp decline in wholesale beef prices.
  • Choice boxed beef fell $2.73 this morning while Select beef slipped $1.34. Movement is decent at 93 loads, however.
  • Deferred contracts are slightly weaker on bull spreading.
  • Feeder cattle futures are lower on position evening ahead of the weekend.

 

Lean hog futures are favoring the upside with slight gains.

  • Position evening ahead of the weekend is the key market driver today with May through deferred futures slightly to moderately higher. The expiring April contract is slightly lower on expectations of lower cash prices.
  • The market is gaining light support from the rise of 46 cents in the pork cutout value this morning. Movement is somewhat light at 138.59 loads, however.
  • Packer profit margins continue to trade in the red, which will limit cash hog demand. Bids are mostly steady today with a few paying $1 lower prices.
  • The cash hog index has declined this week, but it remains at roughly a $3 premium to April futures, which expire Monday. The May contract is $8 below the cash index.
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