Ahead of the Open (VIP) -- April 16, 2013

April 16, 2013 03:17 AM
 

Following yesterday's sharp decline that spilled over into the commodity markets in general, gold futures are firmer this morning on short-covering. While the Dow Jones Industrial Average remains in its uptrend, gold futures have done severe technical damage on the weekly continuation chart -- adding uncertainty to the commodity outlook.

Corn futures are called 1 to 2 cents firmer on short-covering.

  • Corn futures ended the overnight session marginally to 2 cents higher on short-covering as traders view yesterday's losses as overdone.
  • Sharp weakness in the U.S. dollar index and gains in gold futures are helping to lift corn futures this morning.
  • But upside potential is being limited by lackluster demand and expectations for a crop recovery this year.
  • Still, at just 2% complete as of Sunday, corn planting is off to a slower-than-usual start. Another rainy week for much of the Corn Belt will keep producers out of fields in the heartland for another 7 to 10 days.
  • Gulf corn basis is steady this morning to stand 63 cents above May futures for immediate delivery.

 

Soybean futures are called 5 to 10 cents higher on short-covering.

  • Old-crop soybean futures led overnight gains with gains around 7 to 12 cents; new-crop futures were mostly 4 to 6 cents higher.
  • A more positive tone in outside markets is lending to short-covering following yesterday's losses to maintain the recent choppy tone.
  • An Argentine grain trader is quoted by Dow Jones this morning saying China's soybean demand may slow the second half of the year due to the large bird-flu outbreak. Concerns about China's slowing economy adds to concerns about its feed demand.
  • Buying in new-crop soybean futures is being limited by ideas corn planting delays will result in some producers switching those acres to soybeans.
  • Gulf soybean basis is steady for immediate delivery to stand 88 cents above May futures, but it has softened by 3 cents for late April shipment.

 

Wheat futures are called mixed, with pressure limited by dollar weakness.

  • Chicago and Kansas City wheat futures ended the overnight session mixed, with Minneapolis 3 to 5 cents higher.
  • Minneapolis wheat futures are seeing a lift this morning from concerns about cool and wet weather delaying spring wheat planting.
  • But yesterday's crop condition report showed little change in the condition of the winter wheat crop. Our weighted Crop Condition Index reveals the condition of the HRW crop declined slightly, while SRW improved a similar amount.
  • Another freeze event is expected in the HRW Wheat Belt later this week, although yesterday's state-by-state crop reports reflect little freeze damage -- so far.

 

Live cattle futures are called to open mixed on a combination of followthrough pressure and short-covering.

  • Nearby live cattle futures widened their discount to last week's cash market yesterday amid sharp spillover from general commodity weakness. Futures are due for a corrective bounce.
  • But upside potential will remain limited by concerns about beef demand. A slower-than-usual start to the grilling season remains on traders' minds, as do global economic concerns that are taming export demand.
  • The boxed beef market started the week mixed, with Choice values up 37 cents and Select down 23 cents on light movement of 134 loads.

 

Lean hog futures are called to open mixed, with pressure limited by short-covering.

  • Lean hog futures are called mixed on followthrough yesterday's sharp decline, with both some short-covering and followthrough pressure expected.
  • Pork cutout values rose $1.12 yesterday to lift packers' profit margins back into the black. But pork cutout movement of 296.40 loads to start the week was relatively light. The price jump may signal retailers will soon be featuring pork.
  • But with May lean hog futures trading at around a $4 premium to the cash index, the risk of followthrough pressure from yesterday's losses remains a threat.
  • The cash hog market is expected to be steady to weaker today amid light demand.
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