Ahead of the Open (VIP) -- April 15, 2013

April 15, 2013 03:16 AM

Sharp price pressure on gold and silver futures is lending to a "risk-off" attitude in the raw commodity markets. Gold is now at its lowest level in more than two years. News that China's economy grew at a slower-than-expected 7.7% rate in the first quarter raises concerns about the global economy. Click here for more perspective.

Corn futures are expected to open 8 to 12 cents lower this morning.

  • Corn futures ended the overnight session mostly 9 to 13 cents lower and near session lows as selling picked up on concerns about the global economy.
  • Key this morning will be if traders view the plunge in gold as overdone, as it has moved off its lows.
  • Meanwhile, Gulf corn basis is a penny firmer for immediate delivery to stand 63 cents above May futures and a penny weaker for late April shipment.
  • Meanwhile, a cooler- and wetter-than-normal weather pattern is expected to dominate across the Midwest this week, which will delay the start the spring planting season. Most of the area needs at least a week of dry weather to spur fieldwork.


Soybean futures are expected to open 8 to 14 cents lower.

  • May bean futures ended the overnight session 8 cents lower, with the rest of the market down 11 to 13 cents on spillover from weakness in crude oil and gold futures.
  • Concerns about slower-than-expected economic growth in China is lending to concerns about the country's demand for soybeans.
  • Also raising concern about China's soybean demand is the spread of bird flu. The death toll related to the virus rose over the weekend.
  • Gulf soybean basis slipped 2 cents for immediate delivery this morning to stand 88 cents over May futures. Basis is steady for late April shipment.


Wheat futures are expected to open 6 to 14 cents lower on spillover from neighboring pits and negative outside markets.

  • Chicago and nearby Kansas City wheat futures ended the overnight session with double-digit losses, with Minneapolis wheat down 6 to 8 cents.
  • Sharp weakness in gold futures is lending to a "risk-off" atmosphere this morning.
  • But this may be somewhat offset by news China purchased 480,000 MT of SRW wheat for 2013-14, which confirms talk earlier this month that China was buying U.S. wheat.
  • Wheat was also vulnerable to profit-taking following Friday's high-range close, although traders remain concerned about the HRW wheat crop after last week's freeze event.
  • It will take another week (or so) for last week's freeze damage to be reflected in the weekly condition report, but traders will be looking for signs in this afternoon's report.


Cattle futures are expected to see spillover from negative outside markets.

  • Concerns about the global economy are expected to spill over into the cattle pit, as traders grow weary waiting for beef demand to improve.
  • Traders will keep a close eye on the boxed beef market to start the week after beef movement improved late last week.
  • Weakness in the corn market should help to limit pressure in feeder cattle futures.


Lean hog futures are called to open steady to weaker on spillover from weakness in the commodity world.

  • Sharp pressure on gold futures is expected to weigh on lean hog futures this morning to go along with the general "risk-off" appetite this morning.
  • The cash hog market is called steady to lower across the Midwest as packers are cutting kill hours to deal with tightening market-ready supplies and in response to negative profit margins.
  • May lean hog futures are trading at more than a $5 premium to the cash index, which opens significant near-term downside risk for nearby hog futures.


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