Wheat Returns to a Premium to Corn

March 14, 2013 02:23 AM

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Overnight highlights. Following are opening grain and livestock calls at 7:25 a.m. CT:

Corn: Narrowly mixed. March corn is around a penny lower and the rest of the market is steady to marginally higher in lackluster trade. Buying is being limited by strength in the dollar index. While traders recognize old-crop stocks are tight, they are also taking note of recent signals end-users are seeking alternatives for U.S. corn. Meanwhile, recent moisture improvements across the Corn Belt are limiting buying enthusiasm in new-crop futures. But pressure is also being limited this morning by spreading with soybeans, which are under pressure.

Soybeans: 4 to 7 cents lower. Futures are mostly around 5 cents lower this morning on followthrough from yesterday's sharp losses. This morning's weekly export sales report will provide some direction for the market, as traders continue to watch for signs demand for U.S. soybeans is on the decline as South American supplies become more readily available. But port strikes are scheduled next week in Brazil, which raises concerns about shipping delays from the country. As is the case with corn, recent soil moisture improvements across the Corn Belt are limiting buying to short-covering in new-crop futures.

Wheat: Mixed. Nearby futures are firmer and deferred futures are mixed amid bull spreading. Also of note is the fact May Chicago wheat has returned to a premium to May corn futures. Recent signals that end-users are seeking alternatives for U.S. Corn has triggered a correction of the spread. Wheat futures have enjoyed corrective trade this week to signal a near-term low is in the works, although have much more work ahead in order to confirm a low has been posted.

Live cattle: Mixed. Futures are expected to be choppy today as traders continue to wait on the cash market for direction. Asking prices and bids are about $5 apart which signals cash trade is likely to be delayed until tomorrow afternoon. Meanwhile, boxed beef prices have improved $1.41 from last week, with Choice now at $197.49 -- about $7 higher than last year at this time. Expectations are for at least steady cash cattle trade with last week's $128 trade, although most expect $1 higher trade by tomorrow.

Lean hogs: Mixed. Lean hog futures are expected to be choppy today as traders remain cautiously optimistic futures have posted a near-term low. Concerns about demand for hogs keeps traders cautious, as packers' profit margins have tightened. Pork cutout values have softened 97 cents from last week to $78.44, which is about $5 lower than last year at this time. The cash hog market is expected to be steady at most Midwest locations today.


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