Ahead of the Open (VIP) -- April 11, 2013

April 11, 2013 03:17 AM
 

Corn futures are expected to open 5 to 8 cents higher in old-crop contracts and narrowly mixed in new-crop contracts.

  • Corn futures ended the overnight session 5 to 8 cents higher in old-crop contracts and narrowly mixed in new-crop contracts amid bull spreading.
  • Weekly export corn sales are mildly supportive as they topped expectations at 185,200 MT for 2012-13 and 290,800 MT of 2013-14. Still, the export pace remains sluggish, though domestic demand has improved on the sharp price drop.
  • Gulf corn basis is steady to firmer this morning, with bids for late-April delivery steady to 1 cent higher.
  • Sharp pressure on the U.S. dollar is adding to the positive tone in corn this morning.
  • Planting delays due to cold, wet conditions across the Corn Belt are not yet supportive for new-crop corn futures. Traders see the longer-term benefits of the rains as greater than shorter-term negatives for now.

 

Old-crop beans are expected to open mixed, with new-crop called 7 to 9 cents lower.

  • Overnight price action was mostly lower in the soybean market. But the lead-month May contract did close out the overnight session slightly higher.
  • Weekly export sales were lighter than anticipated at 319,200 MT for 2012-13 and 64,500 MT for 2013-14. But export sales remain strong overall.
  • New-crop futures were pressured overnight by talk that some intended corn acres may get switched to soybeans amid planting delays due to cold, wet conditions.
  • Gulf soybean basis is steady to weaker this morning, which may add to price pressure.

 

Wheat futures are called 3 to 7 cents higher, with Kansas City futures expected to lead price gains.

  • Kansas City futures led price gains overnight amid support from HRW crop concerns. Temps dipped below freezing across the Central and Southern Plains again overnight. The areas which were hit hardest Tuesday night/Wednesday morning were again the coldest areas overnight.
  • Some damage has been done by the freeze event, but it will be a couple weeks before crop scouts have a good read on exactly how much damage.
  • Weekly export sales were at the low end of the pre-report guess range at 263,500 MT for 2012-13 and 76,000 MT for 2013-14. This could curb buying interest a little.
  • But countering this is USDA's daily export sales announcement that China bought 360,000 MT of SRW wheat for 2013-14 delivery.
  • A sharply lower U.S. dollar is also supportive this morning.

 

Live cattle futures are expected to open with a mixed tone. Feeder cattle are also seen opening mixed.

  • Live cattle futures finished very poorly Wednesday, which could lead to some followthrough selling on the open. But the downside should be limited by the discount futures hold to the cash market and that could trigger some corrective short-covering.
  • Cash cattle trade got started at $127 in the Southern Plains Wednesday, which was $1 below the bulk of last week's trade and lower than feedlots and traders had hoped. As a result, many feedlots are still holding out in hopes of getting $128 bids.
  • Demand concerns continue to hang over the market. While boxed beef movement improved to 192 loads yesterday, packers had to lower prices to encourage more retailer purchases.
  • Also, weekly export beef sales were down 3% from week-ago and 45% lower than the four-week average at 10,200 MT.
  • Feeder cattle futures are expected to open mixed a mid a combination of followthrough selling and short-covering.

 

Lean hog futures are called steady to firmer this morning.

  • April lean hog futures will continue to track the cash hog market closely ahead of its expiration tomorrow.
  • Cash hog bids are expected to be mostly steady across the Midwest today, although mixed undertones are likely given varied packer demand.
  • Negative cutting margins and winter weather disruptions have caused some plants to reduce kill hours, while others are still trying to secure late-week kill needs amid tightening market-ready supplies.
  • Weekly pork export sales came in at 13,300 MT, which were down sharply from 48,800 MT in last week's report.
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