Ahead of the Open (VIP) -- April 23, 2013

April 23, 2013 03:19 AM
 

Corn futures are called to open 3 to 5 cents lower on negative outside markets.

  • Corn futures ended the overnight session 3 to 7 cents lower, with pressure coming from negative outside markets and followthrough from yesterday's losses.
  • Traders aren't concerned about the slow start to the planting season, as they expect producers to easily catch up with planting efforts due to a more favorable extended forecast.
  • As of Sunday, USDA says only 4% of the U.S. corn crop was planted, which compares to 26% on this date last year and 16% on average.
  • Gulf corn basis is steady this morning to stand 56 cents above May futures.
  • December corn is hovering above support at the April low of $5.25 1/2. Violation of this support could trigger sell stops.

 

Soybean futures are expected to favor a weaker tone in mixed trade.

  • Soybean futures ended the overnight session mixed, with May up 2 1/4 cents and November down 3 1/4 cents.
  • Futures are favoring a weaker tone due to negative outside markets and forecasts for more favorable planting conditions by next week.
  • Additional pressure is coming from concerns about a slowdown in China's economy. The HSBC flash purchasing managers' index declined in April from the previous month. The new export orders sub-index also declined, which signals contraction in foreign demand.
  • Also this morning, USDA announced a 392,000-MT soybean sale to China during the 2013-14 marketing year.
  • Meanwhile, Gulf soybean basis is steady for April shipment to stand 95 cents above May futures, with basis for early May delivery up 11 cents to stand 85 cents above May futures.

 

Wheat futures are called 3 to 7 cents lower on spillover from neighboring pits.

  • Chicago wheat futures ended the overnight session 7 to 8 cents lower, with Kansas City 3 to 7 cents lower and Minneapolis mostly 2 to 7 cents lower in mixed trade.
  • Traders are generally ignoring yesterday's crop condition report that showed further deterioration in the crop, as they focus on negative outside markets and see spillover from neighboring pits.
  • The Pro Farmer weighted Crop Condition Index shows the HRW wheat crop declined by nearly 8 points from last week and is around 100 points lower than year-ago. The SRW wheat index was basically steady with last week.
  • Yesterday's progress report showed planting of the spring wheat crop remains slow, as just 7% has been seeded. That compares to 52% last year and 24% on average.
  • Also weighing on wheat futures this morning is news that Ukraine appears ready to lift its ban on wheat exports for the remainder of 2012-13.

 

Live cattle futures are called to open steady to lower in reaction to the bearish Cold Storage Report.

  • Yesterday's Cold Storage Report provided another reminder that demand is lackluster, which is expected to pressure futures this morning.
  • Total beef stocks in frozen storage of 513.243 million lbs. were a record for the month and came in 2% above year-ago.
  • Meanwhile, Choice boxed beef values firmed 68 cents and Select was up 4 cents, but movement was lackluster as just 164 loads changed hands.
  • This week's showlist is up slightly from last week. Cash cattle trade isn't expected to get underway until later in the week.

 

Lean hog futures are called to open lower in reaction to the higher-than-expected build in pork stocks.

  • Yesterday's Cold Storage Report is expected to weigh on lean hog futures this morning as it showed stocks above expectations.
  • Pork stocks at the end of March of 648.789 mil. lbs. were the second highest on record for the month and were up 2% from the previous month.
  • Meanwhile, pork cutout values firmed $1.45 yesterday on solid movement of 329.9 loads. Continued strength in the pork market this week would suggest a near-term low has been secured.
  • Packers' profit margins have improved, which is expected to result in steady to firmer cash bids as some packers are short bought. This should help to limit pressure on futures.
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