Ahead of the Open (VIP) -- April 10, 2014

April 10, 2014 03:20 AM
 

Corn futures are called 1 to 4 cents lower, with new-crop futures expected to lead losses.

  • Corn futures ended the overnight session weaker on followthrough from yesterday's losses and slight strength in the U.S. dollar index.
  • The sell-the-fact reaction in the face of a tighter-than-expected old-crop carryover peg signals the market needs a dose of fresh bullish news.
  • This morning's weekly export sales data didn't provide any bullish surprises, but it reflects demand rebuilding.
  • Export sales of 658,700 MT for 2013-14 and 58,000 MT for 2014-15 were within expectations and exports topped 1.2 MMT.
  • Brazil's Conab made a minor revision to the country's corn crop, pegging it at 75.5 MMT.
  • Gulf corn basis is steady to 2 cents weaker for near-term delivery as supplies remain adequate.

 

Soybean futures are called to open 2 to 5 cents lower amid profit-taking.

  • Following yesterday's gains, soybean futures were slightly lower overnight amid profit-taking.
  • Traders are also reacting to news that Brazil's Conab has raised the country's soybean crop by 700,000 MT to 86.1 MMT after slashing the estimate last month due to drought.
  • Reuters is also reporting that Chinese importers have defaulted on at least 500,000 MT of U.S. and Brazilian soybean cargoes due to problems obtaining credit due to poor crush margins.
  • Meanwhile, this morning's weekly export sales data shows sales of 79,100 MT for 2013-14 and 210,400 MT for 2014-15, matched expectations. Old-crop sales cancellations of just 114,600 MT to unknown were reported.
  • USDA reports weekly exports of 700,400 MT.
  • Gulf soybean basis is steady amid tight old-crop supplies.

 

Wheat futures are called mixed, with SRW marginally lower, HRW mixed and HRS firmer.

  • SRW wheat futures ended the overnight session marginally to a penny lower, with HRW narrowly mixed and HRS up 1 to 2 cents.
  • Price action was choppy overnight amid position squaring after traders reacted to yesterday's bearish S&D Report with moderate losses.
  • This morning's weekly export sales data showed sales of 41,800 MT for 2013-14 -- which is a marketing year low. Sales of 349,100 MT for 2014-15 brought the combined tally above expectations.
  • Wheat exports, however, of 553,600 MT were above the four-week average.
  • This morning's drought monitor showed further deterioration in the Oklahoma/Texas panhandle area, with soil moisture little changed in Kansas.

 

Live cattle futures are called mixed as traders wait on cash trade.

  • Live cattle futures were choppy in overnight electronic trade, with nearbys firmer and deferreds weaker amid spreading.
  • Traders are waiting on direction from the cash market, but also note that nearbys are trading at a steep discount to last week's $148 to $150 trade. This encouraged light short-covering in nearby futures overnight.
  • The beef market is signaling a near-term low may be near, as movement has picked up. Choice values slipped $1.53 yesterday and Select declined $1.74.
  • But a total of 242 loads of beef changed hands yesterday, signaling prices have declined enough to encourage retailers to stock up ahead of grilling season.
  • A weaker tone in the corn market will limit pressure on feeder futures this morning. April feeders ended yesterday in line with the cash index.
  • Also this morning, USDA reports weekly beef export sales of 18,500 MT were a marketing year high.

 

Lean hog futures are called to open mostly lower amid liquidation.

  • Following yesterday's sharp gains, lean hog futures were mostly lower in overnight electronic trade, with the exception being the front-month contract that was firmer.
  • Increased volatility in hog futures is a sign of topping. Key this morning will be if traders view overnight losses as a buying opportunity after yesterday's strong recovery.
  • Pressure overnight also came amid a sharp decline in pork cutout values. Carcass values slipped $3.14 amid sharp weakness in the ham market as buying for Easter comes to a close.
  • But the good news is movement picked up, as a total of 506.93 loads changed hands yesterday, which signals retailers view prices as a relative value, especially compared to beef.
  • The cash hog market is called steady to lower as packers work on improving margins.
  • April lean hog futures hold just a $4 discount to the cash index, which is much more in line due to recent weakness in the cash market.
  • USDA reports weekly pork export sales of 4,200 MT were a marketing year low.
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