Ahead of the Open (VIP) -- April 10, 2013

April 10, 2013 03:13 AM
 

Corn futures are expected to open fractionally to 2 cents higher as traders await this morning's USDA reports.

  • Corn futures ended the overnight session fractionally to 2 cents higher, with new-crop leading gains.
  • Traders have moved to the sidelines in anticipation of this morning's USDA Supply & Demand Report.
  • The report is expected to show 2012-13 carryover up around 192 million bu. from last month after the March Grain Stocks Report revealed stocks were larger than expected.
  • Gulf corn basis is 1 cent higher for the first half of April and 2 cents weaker for the last half of April, which suggests there may be some fresh demand news on the horizon.
  • There is also news this morning that Japan has purchased three cargoes of South African corn due to tight supplies in the U.S. and South American shipping delays.

 

Soybean futures are called 1 to 2 cents lower on concerns about Chinese soybean imports.

  • Soybean futures ended the overnight session steady to 1 cent lower.
  • Chinese bird flu concerns continue to raise concerns about the country's feed demand.
  • Also concerning is news China had a trade deficit of $884 million in March following a surplus of $15.25 billion in February. China has launched an investigation into the overstated export numbers since December.
  • Meanwhile, according to official Chinese trade data, it imported 3.84 MMT of soybeans last month, which is up 32.4% from February, but down 20.5% from year-ago.
  • Gulf soybean basis is up 2 cents for first half April delivery and is steady for the last half of the month.
  • Traders are also awaiting this morning's USDA Supply & Demand Report that is expected to show carryover up around 12 million bu. from last month after the latest Grain Stocks Report showed stocks above expectations.

 

Wheat futures at all three exchanges are called 3 to 5 cents lower as traders move to the sidelines ahead of USDA's reports.

  • Wheat futures ended the overnight session mostly 3 to 6 cents lower at all three exchanges.
  • Buying in the wheat market overnight was limited to short-covering as traders expect this morning's USDA report to show 2012-13 wheat carryover up around 15 million bu. from last month after the March Grain Stocks Report showed stocks up more than expected.
  • Meanwhile, temps dipped well below freezing as far south as northern Texas overnight. It will take at least a week to get a good idea of how much crop damage occurred.

 

Live cattle futures are expected to open steady to firmer on an improved tone from the boxed beef market.

  • Live cattle futures are expected to be steady to firmer this morning on short-covering.
  • Choice boxed beef values improved 46 cents yesterday and Select rose 56 cents, though movement remained light at 132 loads.
  • Tighter market-ready supplies give feedlots more bargaining power in this week's cash negotiations, which raises expectations for at least steady cash trade with last week's mostly $128 trade. But packers may be hesitant to raise bids due to negative margins.
  • April live cattle are trading at a discount to last week's cash trade, which signals traders are not convinced steady to firmer cash trade will occur.

 

April lean hogs are called steady to weaker on concerns about packer profit margins.

  • The cash hog market is called steady to weaker as demand for cash hogs has declined amid negative margins.
  • But pressure on lean hog futures should be limited by tightening market-ready supplies and expectations that retailers will soon begin to feature pork for the summer grilling season.
  • April lean hog futures are trading in line with the cash index. Therefore, how the cash market performs the remainder of the week should influence the direction of nearby futures. Upside potential should be limited due to expectations for a softer cash tone.
     
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