Ahead of the Open (VIP) -- April 1, 2014

April 1, 2014 03:14 AM
 

Corn futures are called to open 2 to 5 cents higher on followthrough buying.

  • Corn futures ended the overnight session mid-range, with gains of 3 to 4 cents on followthrough from yesterday's strong close.
  • May corn has moved to its highest level since Sept. 3. A high-range close today would signal bulls are gaining momentum.
  • Traders still have yesterday's key USDA reports on their minds, as it showed farmers intend to plant fewer acres than traders expected.
  • As a result, the market must bid for acres. Favorable spring weather will also be key to corn garnering acres.
  • Additionally, the March 1 corn stocks figure came within expectations to affirm to the market that demand is rebuilding.

 

Soybean futures are called 7 to 14 cents higher, with nearbys leading gains amid bull spreading.

  • Bull spreading continued in overnight trade, but new-crop futures were also lifted after posting slight losses yesterday. Futures ended the overnight session 7 to 12 cents higher.
  • Traders still have yesterday's key USDA reports on their minds, which is supportive of bull spreading. The reports confirmed old-crop stocks are tight and that farmers intend to plant more soybean acres.
  • May corn futures rose to a high of $14.81 3/4 overnight to confirm yesterday's upside breakout. November soybeans ran into resistance overnight when the market touched $12.00.
  • Meanwhile, China's ministry of commerce says the country likely imported 5.69 MMT of soybean in March, which is up 440,000 MMT from its previous forecast. It predicts April imports of 5.11 MMT.

 

All wheat flavors are called to open 4 to 7 cents lower on profit-taking.

  • All wheat flavors ended the overnight session mostly 5 to 6 cents lower on profit-taking.
  • SRW wheat ended mostly firmer yesterday and near session highs, while HRW and HRS markets were weaker.
  • Traders are still digesting yesterday's USDA reports, which showed wheat stocks in line with traders' expectations and wheat acreage lower than expected.
  • USDA says farmers intend to seed just over 12 million acres to spring wheat, which is below expectations but still higher than roughly 11.6 million last year.
  • Pressure on futures this morning should be limited by ongoing concerns with the HRW wheat crop. Yesterday's state reports indicated dry conditions continue to stress the HRW wheat crop, as the percent of the crop rated in "poor" to "very poor" condition continues to deteriorate in Kansas, Oklahoma and Texas. USDA will release its first crop progress and condition report of the year next Monday.

 

Live cattle futures are called to open mixed as traders wait on direction from the cash market.

  • Live cattle futures are expected to see a choppy start as traders reevaluate positions following yesterday's losses.
  • Traders also note that with nearby futures at a discount to this week's lower cash expectations, there is some room to the upside for a correction in those contracts.
  • Feedlots say this week's showlist is up from last week, which gives them less bargaining power in cash negotiations this week.
  • Additionally, Choice beef values started the week 67 cents lower and Select tumbled $2.33 on light movement of 126 loads.
  • The combination of higher showlists and weakness in the beef market raises expectations for $1 to $2 lower cash cattle trade compared with last week's $152 to $154 trade.
  • A firmer tone this morning in the corn market is expected to result in followthrough selling in feeder futures after yesterday's sharp losses.

 

Lean hog futures are called to open steady to firmer on short-covering.

  • Lean hog futures are expected to see a firmer start amid short-covering. Futures closed sharply lower yesterday in reaction to Friday's negative Hogs & Pigs (H&P) Report. However, the market finished well off session lows.
  • Traders were disappointed by the H&P data, as it showed most categories on the bearish side of expectations. But traders are beginning to discount the data, as they believe it doesn't fully account for losses from the porcine epidemic diarrhea virus (PEDV).
  • A strong start to the pork market is also supportive for futures this morning, as pork values firmed $1.23 yesterday. However, movement was a light 213.88 loads.
  • With packers' profit margins in the black, the cash hog market is expected to be steady to firmer today.
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