Ahead of the Open (VIP) -- April 16, 2014

April 16, 2014 03:22 AM
 

Corn futures are called steady to 1 cent lower amid lackluster trade.

  • Corn futures ended the overnight session marginally to a penny lower in lackluster trade, with the December contract holding above the $5.00 level.
  • Key this morning is if traders view overnight weakness as a buying opportunity as bulls still have the technical advantage. Futures remain within the boundaries of the gradual uptrends established from the January lows.
  • There's little fresh news for the market to digest this morning, as traders wait on tomorrow's weekly export sales data for confirmation prices are still attracting demand.
  • Traders are digesting news that Chinese producers intend to increase corn acreage by 1.75% this year, according to a survey conducted by China's National Bureau of Statistics.
  • A weaker tone in the dollar index is helping limit pressure on corn futures this morning.

 

Soybean futures are called to open 7 to 16 cents higher on followthrough buying.

  • Old-crop soybean futures ended the overnight session 10 to 16 cents higher and new-crop futures were 6 to 8 cents higher on followthrough buying.
  • Concerns about the old-crop stocks situation are supportive for the soybean market as traders begin to more aggressively search for a price that slows demand after yesterday's domestic crush data revealed there's still incentive for processors to crush soybeans.
  • While traders anticipate producers will increase soybean acreage in the U.S. this spring, a prospect of tightening carryin is supportive for new-crop contracts.
  • Meanwhile, China's first quarter GDP slipped to an 18-month low of 7.4% over year-ago from a rise of 7.7% in the previous quarter. No additional stimulus measures beyond China's recent "mini-stimulus" efforts are expected.
  • May soybeans posted a new contract high of $15.22 3/4 overnight.
  • A weaker U.S. dollar index is also supportive this morning.

 

SRW and HRW futures are called steady to 2 cents higher, with HRS expected to see a mixed tone this morning.

  • SRW wheat futures were mostly 2 to 3 cents higher overnight, with HRW steady to 1 cents higher and HRS was narrowly mixed.
  • An overnight freeze event in SRW wheat country is providing just light support this morning as traders don't anticipate widespread damage.
  • There is still concern about the Monday night freeze event in HRW wheat country as winter wheat crop conditions are much worse in the Southern Plains than in the eastern Corn Belt.
  • Traders are also monitoring political tensions in the Black Sea region as Russia's military presence is increasing. But so far, this has not had a major impact on grain shipments from the region.
  • SRW wheat enjoyed followthrough from yesterday's gains in overnight trade, as bulls have reclaimed the near-term technical advantage. May SRW wheat closed above the $7.00 level yesterday and ended the overnight session near the highs.

 

Live cattle futures are called slightly lower after a weaker tone overnight. Feeder futures are called slightly lower on spillover from live cattle.

  • Live cattle futures saw light pressure overnight, but a mixed start is possible as traders wait on cash trade to begin.
  • Pressure should be limited by the fact April live cattle are trading at around a $2 discount to last week's $147 trade.
  • Choice beef values firmed 34 cents yesterday and Select rose $1.09 on solid movement of 181 loads, suggesting the recent price decline is complete as beef values appear to be a relative "value."
  • But packers are not expected to raise bids this week as they work to improve profit margins and believe supplies are adequate for this week's shortened kill schedule.

 

Lean hog futures are called to open slightly lower on weakness in the pork market.

  • Lean hog futures were slightly to moderately lower in overnight trade due to weakness in the pork market.
  • Pork cutout values slipped $2.26 yesterday amid moderate movement of 347.48 loads to tighten packers' profit margins.
  • As a result, the cash market is called steady to lower this morning as packers work to improve margins and and have a reduced kill schedule to accommodate for Easter weekend.
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