Ahead of the Open (VIP) -- April 15, 2014

April 15, 2014 03:15 AM
 

Corn futures are called 1 to 3 cents lower amid profit-taking.

  • Corn futures ended the overnight session mostly 1 to 3 cents lower on profit-taking following yesterday's gains.
  • Key this morning is if traders view early weakness as a buying opportunity as bulls still have the near-term technical advantage. May corn spent the overnight session pivoting around the key $5.00 level.
  • USDA reports as of Sunday that 3% of the nation's corn crop was seeded, which compares to the five-year average of 6% and 2% last year. Very little planting has begun in the heart of the Corn Belt.
  • But there is limited concern about the current wet and cool weather trend, as warmer temps are in the forecast for next week.

 

Soybean futures are called to open mixed amid bull spreading.

  • Old-crop soybean futures were 3 to 7 cents higher overnight, with new-crop marginally to 1 cent lower amid bull spreading.
  • Nearbys continue to find support from the tight stocks situation, as the window for U.S. soybean exports has remained open longer than usual.
  • May soybean futures tested $14.90 in overnight trade. Key this morning is if funds continue to extend their long exposure to the market. Technicals clearly remain in favor of bulls.
  • November soybean futures also remain in an uptrend, but have paused around the $12.20 level.

 

SRW futures are called 1 to 2 cents lower, with HRW down 3 to 4 cents. HRS is expected to be mixed.

  • Wheat futures were choppy overnight following yesterday's strong gains, with SRW and HRW ending the overnight session weaker and HRS ending narrowly mixed.
  • Futures were supported yesterday by concerns about the winter wheat crop and heightened tensions in the Black Sea region.
  • As expected, yesterday's crop condition ratings reflected further deterioration in the winter wheat crop. Our weighted Crop Condition Index (scale 0 to 500 being perfect) reveals the HRW crop declined 6 points to 293, while the SRW crop improved 4 points to 352.
  • Forecasts for a freeze event in the Southern Plains were correct, as temps were cold enough for long enough to do damage, although it will take time to access damage.

 

Live cattle futures are expected to see light profit-taking this morning.

  • Live cattle futures saw light profit-taking pressure in overnight trade, but bulls still have the technical advantage.
  • Price action is likely to be choppy as traders wait on clearer direction from the cash market. Demand for supplies is lighter this week due to the Easter-related shortened kill schedule.
  • Choice beef values firmed 40 cents yesterday and Select declined 41 cents on solid movement of 169 loads. The recent increase in movement suggests beef values have returned to "value" levels (although still historically high).
  • Pressure on nearby live cattle should be limited by the $2 discount April futures hold to last week's $147 cash cattle trade.
  • A weaker tone in the corn market should also help to keep losses in the feeder cattle pit in check.

 

Lean hog futures are called to open slightly lower amid profit-taking.

  • Lean hog futures saw light profit-taking pressure overnight, which is expected to spill over into daytime trade.
  • Futures are also expected to be pressured by ongoing weakness in the pork market. Values slipped 98 cents yesterday amid light movement of 212.85 loads.
  • Packer demand for cash supplies is reduced this week as they work to improve profit margins and have a reduced kill schedule to accommodate for Easter weekend.
  • As a result, the cash market is called steady to weaker this morning.
  • May lean hog futures are now the lead-month contract and are trading at around a $6 discount to the cash index.
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