Ahead of the Open (VIP) -- April 14, 2014

April 14, 2014 03:18 AM
 

Corn futures are called 2 to 4 cents higher on concerns about winter-like weather across the Midwest.

  • Corn futures ended the overnight session mostly 2 to 3 cents higher, which was mid-range.
  • Corn enjoyed spillover from sharp gains in the wheat market, but as wheat came off session highs, corn followed suit.
  • Also supportive for the market market is concerns about a timely start to the planting season. After a warm-up on Saturday, cold temps and a mix of wintery precip has returned to the Corn Belt to start the work week.
  • SovEvon raised its 2013-14 grain export forecast and it upped its corn export forecast by 400,000 MT to 4.2 MMT.
  • Key this morning is if traders return to extend long positions as May corn spent much of the overnight session above the key $5.00 level.

 

Soybean futures are called to open mixed amid bull spreading.

  • Old-crop soybean futures ended the overnight session 1 to 5 cents higher, with new-crop down mostly a penny amid bull spreading.
  • Tight old-crop stocks continue to support nearby futures, while prospects for a sharp increase in soybean acreage this spring triggered light selling in new-crop futures.
  • Additionally, a mix of winter-like weather is moving across the Midwest today and colder-than-normal temps are expected to linger for the week. As a result, concerns about a delay to corn planting are spurring thoughts about soybeans taking some acres away, although there is still plenty of time to get intended corn acres planted.
  • A firmer tone in the U.S. dollar index amid safe-haven buying limited buying in the bean pit overnight.
  • But bulls still hold the near-term technical advantage in the soybean market.

 

Wheat is called 9 to 15 cents higher on a combination of weather concerns and heightened tensions in the Black Sea region.

  • Wheat was the upside leader in the grain complex overnight, with SRW wheat up mostly 10 to 14 cents, HRW up 11 to 17 cents and HRS mostly 12 to 13 cents higher.
  • Clashes in eastern Ukraine have raised concern that shipments of grain supplies from the region will be disrupted.
  • But SovEcon has raised its Russian 2013-14 grain export forecast from 24.2 MMT to 25 MMT after an active month of shipments. It increased its wheat export forecast by 200,000 MT to 17.8 MMT.
  • Meanwhile, traders are also focused on the weather after rains disappointed the Plains last week and skirted around the driest areas over the weekend. There is also a freeze warning in effect as far south as the Texas Panhandle for tonight and Tuesday.
  • Traders expect this afternoon's crop condition ratings from USDA to reflect continued deterioration.
  • Key will be if traders extend long exposure to the market this morning after futures came well off early highs in late overnight trade.

 

Live cattle futures are called to open mixed, with buying limited by short-covering.

  • Live cattle futures were marginally to slightly higher in thin, overnight trade. Futures are expected to see a choppy start to daytime trade.
  • Buying was limited to short-covering overnight by weakness in the cash and product markets. Cash cattle traded at $147 in the Southern Plains late Friday, down $1 from the previous week.
  • April live cattle are trading at around a $2 discount to last week's cash trade, which spurred short-covering overnight.
  • But traders will be keeping a close eye on the product market after prices dropped sharply last week. Choice beef values fell another $2.88 on Friday and Select dropped $1.84. But beef movement picked up last week to signal retailers are preparing for post-Easter features.

 

Lean hog futures are called to open mixed amid position squaring.

  • Lean hog futures were narrowly mixed in overnight trade, with similar trade expected on this morning's open.
  • Buying in hog futures will be limited this morning by ideas the market has topped, but April futures ended last week at around a $3 discount to the cash index.
  • The cash hog market is called steady to $1 lower amid light demand as packers work to improve margins and have a shortened kill week ahead due to the Easter weekend.
  • Pork cutout values slipped 3 cents on Friday and movement was light at 296.97 loads. The product market needs to stabilize to support the cash market.
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