4-16-14 – Grain and soybean futures are mixed in overnight trading. Soybeans are finding support from nearby demand for old crop after a better-than-expected National Oilseed Processors Association crush report Tuesday.\r\n\r\n NOPA reported a March crush of 153.84 million bushels, 12% more than a year ago and 5.3% above the 146.2-million-bushel average of trader estimates. It was even well above the high end of the range of trader estimates.\r\n\r\n This plays into trader fears of very tight supplies of soybeans at the end of the crop year Aug. 31 and brought buyers in on Tuesday and overnight.\r\n\r\n \r\n\r\nWEATHER FEARS KEEP WHEAT ON EDGE\r\n\r\n \r\n\r\n Freezing temperatures in the southern Plains have many wheat traders nervous. Some damage appears unavoidable, but the extent is unknown. It all depends on where the coldest temperatures occurred and how advanced the crop was in those locations.\r\n\r\n Wheat that was very advanced could have been hit hard. Freezing temperatures have less effect on wheat early in the jointing stage, when critical reproductive parts are close to the ground, and this year’s cold spring is delaying development.\r\n\r\n Texas wheat likely is most vulnerable to the freezing temperatures since the National Agricultural Statistics Service shows 28% was heading as of Sunday. At this stage, the head is visible and no longer protected by the stem.\r\n\r\n Kansas wheat may show less damage, analysts say, because the wheat is less developed, delayed by previous bouts of cold weather.\r\n\r\n \r\n\r\nCHINA GROWTH PROSPECTS IMPROVE OPTIMISM\r\n\r\n \r\n\r\n China’s better-than-expected first-quarter Gross Domestic Product has Asian and European stock markets up this morning amid new growth estimates for coming quarters. The expanding No. 2 economy likely means greater import needs of all kinds.\r\n\r\n China’s economy grew 7.4% in the first quarter, down from 7.7% in the previous quarter, but it beat expectations of 7.3% growth.\r\n\r\n That may seem like enviable growth for most economies, but in the last two months, China saw its first domestic bond default combined with some bankruptcies that left traders nervous that the growth bubble was about to pop.\r\n\r\n However, with a 7.4% GDP, those fears appear to have been laid aside for now, heightening trade expectations.\r\n\r\n \r\n\r\nCASH MARKETS CONFUSE CATTLE\r\n\r\n \r\n\r\n Cash cattle and beef markets continue to confuse futures traders. On the one hand, cash prices last week were above the April futures, which should be a drag on cash. But while cash prices did decline last week, the dip wasn’t harsh, being down mostly $1 per cwt on a live basis in light trade at $147. On a dressed basis, prices were even $1 to $2 higher at $240 to $243.\r\n\r\n Current packer margins are thought to be negative, but beef prices last week showed signs of bottoming, which could lead to more demand for slaughter inventory and price support for cattle.\r\n\r\n The USDA reported its choice beef cutout value Tuesday at $222.86 per cwt, up $0.34, and select at $213.14, up $1.09. The choice/select spread narrowed to $9.72, and there were 145 fabricated loads sold into the spot market.\r\n\r\n Slaughter through Tuesday was estimated at 233,000 head, unchanged from last week, but well behind the 242,000 head of last year.\r\n\r\n A high pressure zone is expected over the eastern states today that is forecast to bring clear skies but cold temperatures. The sunny skies may have many consumers thinking about grilling, but the cold temperatures likely will keep them indoors.\r\n\r\n The CME Feeder Cattle Index for the seven days ended Monday was $179.75, down $0.64, while the April futures contract settled Tuesday at $179.22, down $0.77.\r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–Annual earnings for chicken producers likely will be up this year as high red meat prices increase demand for the cheaper protein in an economy that struggles to create new and good jobs.\r\n\r\n–Sources indicate China cancelled more orders for Brazilian soybeans, which may be offered to US buyers.\r\n\r\n–Trade sources said funds bought wheat and soybeans Tuesday but were largely neutral in corn.\r\n\r\n–But funds could turn bullish on corn if May dips to $5.02, the 50% retracement from a 52-week high.\r\n\r\n–Insiders say funds expect meats to improve on summer demand.
Cattle feeding is pretty straightforward - doing it profitably isn't.