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AgriCharts Market Commentary
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Corn futures are trading 5 to 6 cents lower at midday. The stronger US dollar is a major feature today, with the euro sliding as quantitative easing begins. With a stronger dollar, it takes fewer dollars to buy the same amount of fundamental value. The average trade guess in Bloomberg’s survey for corn ending stocks in the March 10 WASDE report is 1.831 billion bushels, a touch higher than the February estimate. The report will be Tuesday morning. Traders are generally expecting higher corn production figures for South America, with a reduction possible for South Africa due to drought.
Soybean futures are trading 7 to 8 cents lower at midday. US export sales are declining seasonally, and the strong dollar is expected to accentuate the drop off. The US has already shipped 85% of the current full year forecast from USDA, and total commitments including unshipped sales are 98% of the forecast. The trade average guess for soybean ending stocks next Tuesday is 377 million bushels, tightening about 8 million bushels from the February USDA figure of 385 million on assumptions of another hike in projected exports. We’re beginning to see deliveries vs. the March soybean contract now that prices have dropped enough to make the original sellers whole. There were 98 lots put out overnight, bringing the 2 day total to 198.
Wheat futures are trading higher in KC at midday on pre-weekend profit taking type buying and concerns that the expected warm up in the central US could bring wheat out of dormancy and make it more vulnerable to a late freeze. There were 279 contracts delivered vs. March KC wheat, with most going from ADM to Dreyfus. There were 66 contracts delivered vs. Chicago, with no strong stopper noted. The Ukrainian weather service is indicating the 15% of the wheat crop there has suffered winterkill, well above the average 10%. The production estimate is in the 22 MMT range vs. 24.3 MMT last year. Russian production is also expected to be smaller.
Live cattle futures are trading steady to 35 cents lower at midday, with the weakness in the back end. Nearby April is being supported by its discount to the cash cattle market. Cash cattle trade has not developed with enough sales to determine market trend this week. Packer bids are being reported at $158 (and $252-254 in the north), with asking prices mostly $162. Wholesale prices are a little softer this morning, with Choice boxed beef down 21 cents at $248.99. Select boxes are down 95 cents at $245.63. Week to date cattle slaughter at 432,000 head is up 15,000 from last week but lags year ago by 10,000.
Lean hog futures are trading 10 to 87 cents lower at midsession, with nearby April the weakest. Hog slaughter is still running higher than would have been expected based on the December H&P report. We will get updated numbers from USDA on March 27. The pork carcass cutout is 31 cents higher this morning at $68.58 in the FOB plant report. Bellies and hams are a little firmer. Cash hog base prices are not being reported this morning by USDA due to limited numbers and confidentiality restrictions. The CME Lean Hog index is another $0.36 higher at $68.09. Estimated week to date hog slaughter is 1.7 million head, up 42,000 from last week and 73,000 larger than the same point in 2014.
Cotton futures are trading 60 to 70 points lower this morning, facing another rise in the US dollar and the net negative export sales numbers from Thursday. Old-crop commitments now total 95% of the full year USDA forecast, but you don’t want to see leakage via cancelled or deferred business. Shipments for the week were the largest of the marketing year, and they need to be. The YTD total of 4.717 million RB is down 1.01 million RB from last year at this time. Cert stocks rose to 9,948 bales from 9,858 bales with 90 new certs, and 0 decerts and another 947 contracts awaiting review. There were 11 deliveries vs. March futures, all stopped by a JP Morgan client. March futures expire on Monday.