Ahead of the Open (VIP) -- April 18, 2013

April 18, 2013 03:17 AM
 

Corn futures are called 1 to 2 cents higher on short-covering and signs of improved demand.

  • Corn futures ended the overnight session steady in the front-month contract to 2 1/4 cents in the March 2014 contract.
  • Weakness in the dollar index aided short-covering overnight. Some signs of improved export demand are expected to give the market another boost this morning.
  • Weekly export sales of 400,300 MT for 2012-13 and 16,900 MT for 2013-14 were near the top end of expectations.
  • Rains continue to fall across the Corn Belt and soil temps across the heart of the Belt remain too cold for producers to begin planting. While traders aren't overly concerned about the late start to planting, producers realize their "optimal" planting window is closing.

 

Soybean futures are called 4 to 12 cents higher on followthrough from overnight gains.

  • Soybean futures ended the overnight session around 11 cents higher in the nearby contracts, with August through November futures up 5 1/2 to 9 3/4 cents.
  • Futures saw a boost in overnight trade from weakness in the dollar, which triggered short-covering.
  • But buying enthusiasm is being limited by concerns that the bird flu situation in China is spreading, which limits the country's short-term feed demand.
  • Weekly export sales of 339,400 MT for 2012-13 and 227,400 MT for 2013-14 were within expectations.
  • Concerns that producers won't be able to get into fields and actively plant until early May across the heart of the Corn Belt is raising expectations some acres will be switched to soybeans -- especially in the northwest/upper Midwest.

 

Wheat futures are called 5 to 7 cents higher on a boost in export sales.

  • Wheat futures ended the overnight session mostly 3 to 5 cents higher at all three exchanges on help from weakness in the dollar index.
  • Futures are expected to extend overnight gains due to signs prices are encouraging fresh demand.
  • Weekly export sales of 552,100 MT for 2012-13 and 1.123 MMT for 2013-14 were WELL above expectations.
  • Strategie Grains lowered its EU-28 wheat production forecast by 500,000 MT to 131.1 MMT, although that is still up 5% from 2012.
  • Weather is also supportive for the wheat market, as cold and wet conditions are delaying planting in spring wheat country and another cold front is expected to result in freezing temps across areas of the Central and Southern Plains tonight.

 

Live cattle futures are called to open steady to firmer on signs of improved demand.

  • Live cattle futures posted a high-range close and sharp gains yesterday, which gives bulls the advantage heading into this morning's open.
  • Traders are still waiting on active cash cattle trade to begin after light trade was seen earlier in the week at $125 ($2 lower than last week). But following yesterday's sharp gains in futures, feedlots are more optimistic they will see at least steady cash trade.
  • Also supportive of steady to firmer cash cattle trade is improvement in the boxed beef market. Choice values rose 88 cents yesterday and Select was up 56 cents on strong movement of 238 loads.
  • Traders are also beginning to prepare for Friday afternoon's Cattle on Feed Report that will reflect the tightening supply situation.

 

Lean hog futures are called to open steady to firmer on strength in the pork market

  • Lean hog futures rallied into the close yesterday, giving bulls the advantage on this morning's open.
  • Pork cutout values improved 98 cents yesterday and movement surged to 477.05 loads, suggesting demand has improved.
  • Packers have seen profit margins improve, which is improving demand for cash hogs. But bids are expected to be mostly steady today as packers say this week's needs have been secured.
  • But if packer margins continue to improve, it would lift the cash market. Based on the premium nearby futures hold to the cash index, traders are counting on that happening soon.
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