Grains, Soybeans Weaker As Planting Progresses

4-21-14 – Improved weekend weather in the Midwest and Plains states gave farmers a better chance at planting, and forecasts for clear, warm conditions this week pressured corn, soybeans and wheat in overnight trading.  Further losses may be in store for today.\r\n\r\n   Declines in corn and wheat prices could lend support to feeder cattle, which fell sharply on Thursday amid profit taking by investors and spillover pressure from live cattle.  But traders expect further weakness in live cattle as previous feedlot placements point to larger fed cattle supplies in coming months to continue weighing on feeders.\r\n\r\n   The CME Feeder Cattle Index for the seven days ended Wednesday was $178.95, down $0.68, while the April futures contract settled Thursday at $178.15, down $0.70.  April live cattle settled Thursday at $144.20, down $1.55.\r\n\r\n   More live cattle and feeder cattle losses could come today amid unchanged perceptions of rising cattle supplies, uncertainty in world markets, lower grain prices, a higher US Dollar versus the Japanese Yen and a higher stock market. \r\n\r\n   A firmer wholesale beef market last week also did not impress futures traders and may not impress this week as traders who were stung by believing in a strong April beef market remain reluctant buyers. \r\n\r\n   However, it does appear that retailers are betting on better beef sales in May as the weather warms and grilling season begins.  Spot market sales increased last week as beef prices rose.\r\n\r\n   The USDA reported its choice beef cutout value Friday at $226.35 per cwt, up $0.47, while the select cutout fell $0.20 to $215.23.  The choice/select spread widened to $11.12, and there were 122 fabricated loads sold into the spot market.\r\n\r\n   The choice/select spread is well beyond the five year average and is gaining rapidly just like last year, albeit about two weeks sooner than last year.  Warmer weather and more grilling could take the spread up to challenge last year’s high of $19.75 set the first week of June.\r\n\r\n   Slaughter last week was estimated at 568,000 head, down 5,000 from the previous week, and 47,000 below last year’s 615,000.\r\n\r\n   Beef production last week was estimated at 449.6 million pounds, down 0.9% from a week earlier and off 6.24% from a year earlier.\r\n\r\n   Cash cattle trading last week ranged from $146 to $148 per cwt on a live basis.  Early trades were $1 below the previous week, but firmed later.\r\n\r\n   Cash trading was light, possibly leaving cattle unsold to carry over to this week and lend pressure to prices. \r\n\r\n   Cattle traders will be watching beef movement and pricing, as well as slaughter rates, closely this week for signs of follow-through on last week’s action.  Gains could mean consumer acceptance of higher beef prices and point to higher cattle prices.  Declines could mean the opposite.\r\n\r\n \r\n\r\nHEDGE FUNDS SAID LOSING CONFIDENCE IN AG COMMODITIES\r\n\r\n \r\n\r\n   Hedge fund selling was prominent in agricultural futures markets last week, and market analysts said they were losing confidence in agricultural commodities as concerns over weather-related planting delays subside. \r\n\r\n   The CFTC Commitments of Traders Report shows Managed Money, (essentially speculative traders) reducing their long corn positions by 13,785 contracts last week, the second week of declines.  Speculative traders probably remain in selling mode after a long run of bullish speculation.  However, they still hold a net long position of 250,503 contracts.\r\n\r\n   Meanwhile, commercial traders picked up on the speculative selling interest by adding 10,768 long corn positions while leaving themselves net short by 438,975 contracts.\r\n\r\n   For now, it all seems to be about weather.  Corn planting is somewhat delayed from normal, but not late enough to harm overall yields.  Planting deadlines are approaching for the Midwest, but given the right weather conditions, US farmers can get huge amounts of fieldwork accomplished in a short amount of time. \r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–Retail grocers are preparing for better beef sales in May.\r\n\r\n–Weather trumps nearly all market factors for now – even the ups and downs of the latest news out of Ukraine.\r\n\r\n–Funds could turn bullish on corn if May dips to $5.02, the 50% retracement from a 52-week high.\r\n\r\n–There are signs of a near-term top in cash cattle markets.