Ahead of the Open (VIP) -- April 12, 2013

April 12, 2013 03:15 AM
 

Corn futures are expected to open 3 to 6 cents higher this morning.

  • Corn futures ended the overnight session mostly 4 to 6 cents higher and are expected to open with similar gains this morning.
  • Tight supplies and a strong cash market continue to support old-crop corn futures. Gulf basis is 1 to 3 cents higher for April delivery this morning.
  • New-crop futures are getting a mild boost from corn planting delays as conditions are expected to remain cold and wet across the Corn Belt the next two weeks. Traders' focus on corn planting delays should increase next week when USDA starts issuing weekly updates on planting progress.

 

Old-crop beans are expected to open 5 to 8 cents higher, with new-crop called 1 to 3 cents higher.

  • Old-crop soybean led price gains overnight amid support from a strong cash market and corrective short-covering.
  • Gulf soybean basis is 4 cents higher for immediate delivery this morning. In addition to tight supplies, that suggests some fresh demand news may be on the horizon.
  • USDA reported a daily sale of 110,000 MT of U.S. soybeans to an unknown destination for 2013-14, which should support new-crop futures.
  • But gains in new-crop soybeans will likely be limited. Given corn planting delays, odds that some intended corn acres will get switched to soybeans, especially in northern locations are growing. It's still early, but the forecast for the next two weeks is cold and wet across the Corn Belt.

 

Wheat futures are expected to open 4 to 8 cents higher this morning.

  • Chicago and nearby Kansas City wheat futures led price gains overnight, while Minneapolis wheat futures followed.
  • Signs of improved demand for U.S. SRW wheat from China are encouraging short-covering in that market. USDA yesterday confirmed part of the 14 to 16 cargoes of U.S. SRW wheat China recently purchased. Traders expect more Chinese demand.
  • HRW crop concerns are also supportive as the crop must now recover from a second freeze event this spring. Final crop damage assessments won't be known for a couple weeks, but this is another hit to a crop that's already in tough shape.

 

Live cattle and feeder cattle futures are expected to open steady to lower.

  • Ongoing demand concerns are likely to limit buying interest in live cattle futures ahead of the weekend.
  • While futures are trading at a discount to the cash market, traders are taking a prove-it attitude given demand concerns.
  • Boxed beef movement improved yesterday, but packers still moved only 212 loads for the day -- and it took sharply lower prices to encourage the increased retailer demand. Traders fear packers will need to further lower boxed beef prices to encourage buying.
  • Feeder cattle futures are expected to feel pressure from firmer corn prices. Technical-based selling is also likely as chart damage has been done this week.

 

Lean hog futures are expected to show a mixed tone this morning.

  • April lean hog futures expire at noon CT today, which is expected to contribute to light and choppy trade.
  • June hogs are trading at around a $6 premium to the cash index. Seasonally, cash prices should firm into summer as supplies tighten, but demand concerns may cause traders to remove more of that premium.
  • The pork product market is showing signs of strengthening demand as movement has been stronger the past two days. That should help to ease selling pressure.
  • Cash hog bids are expected to be mostly steady, though mixed undertones are likely given varied demand across the countryside.
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