Ahead of the Open (VIP) -- April 3, 2014

April 3, 2014 03:19 AM

Corn futures are called to open 3 to 5 cents higher on ideas yesterday's losses were overdone.

  • Corn futures ended the overnight session mostly around 3 to 4 cents higher amid short-covering following yesterday's round of profit-taking.
  • But ideas yesterday's losses were corrective in nature as traders evened positions ahead of this morning's weekly export sales data helped to firm corn overnight.
  • The sales data is positive for the corn market, as it signals demand remains strong at current price levels. Corn sales of 960,600 MT for 2013-14 and 37,900 MT for 2014-15 were in the upper half of pre-report expectations. The top corn buyer was Japan, followed by South Korea. Equally impressive is the fact exports topped 1.4 MMT.
  • New-crop futures should see a boost from concerns about snow in the forecast for the central Corn Belt, as this raises concerns about a timely start to the planting season.


Soybean futures are called to open 5 to 15 cents higher amid short-covering.

  • Soybean futures ended the overnight session 5 to 13 cents higher amid ideas yesterday's sharp losses were overdone.
  • Strength in the overnight market keeps the uptrend in place after futures tested uptrending support levels yesterday.
  • Key this morning is if funds actively buy. They appear very comfortable with large net long positions.
  • Fundamental support this morning is expected to come from continued buying of old-crop soybeans. While the weekly export sales tally of 66,200 MT for 2013-14 appears light, the fact that cancellations remain light signals USDA's export forecast is too low. Sales of 19,300 MT were reported for 2014-15 and exports of 659,400 MT are impressive for this time of the year.
  • News that Brazil's congress has rejected an amendment to impose new taxes on domestic buyers is being digested by the market.


All wheat flavors are called to open steady to 2 cents higher amid short-covering.

  • SRW wheat ended the overnight session around a penny higher, with HRW fractionally to 1 cent higher and HRS up 2 to 3 cents.
  • Futures were supported overnight by short-covering following recent sharp losses. Key this morning will be if traders view recent losses as a buying opportunity, as the lack of stronger buying overnight provides another clue a high has been posted.
  • Wheat export sales of 336,400 MT for 2013-14 and 310,500 MT for 2014-15 came in above expectations. Exports of 523,100 MT were in line with week-ago.
  • News that banks are tightening payment procedures for Russian grain exporters amid geopolitical unrest are supportive for the market, although traders are uncertainty how much this will impact trade in the region.
  • The Food and Agriculture Organization of the United Nations cut its global 2013-14 wheat crop forecast by 2 MMT to 702 MMT.


Live cattle futures are called to open mixed as traders wait on active cash trade to begin.

  • Live cattle futures are expected to see a choppy start as traders await active cash cattle trade.
  • But the discount nearby futures hold to last week's cash trade provided a firmer tone in electronic overnight trade.
  • Very light cash trade in Nebraska occurred earlier this week at $2 to $4 lower prices (at $150). With packers' margins turning negative, most expect trade to be steady to weaker compared with last week's $150 to $152 action in the Southern Plains.
  • Choice beef values firmed $1.10 yesterday and Select rose 71 cents on improved movement of 151 loads. Traders will be watching the beef market closely for signals retailers are preparing for a round of early spring features.
  • The weekly export sales data also pointed to solid export demand. Weekly beef sales of 13,800 MT and exports of 12,200 MT were reported.


Lean hog futures are called to open lower amid profit-taking.

  • Lean hog futures are expected to see weaker start after trading sharply lower in electronic trade.
  • Funds are expected to book profits this morning, maintaining the recent highly choppy trend. Increased price volatility at elevated levels is often a sign the market is in the process of putting in a major high.
  • Meanwhile, fundamentals remain strong, with the pork market firming 92 cents yesterday amid strong movement of 446.37 loads. Strength in the pork market is helping to keep packers' profit margins in the black.
  • However, it appears packers have at least for now stopped chasing hog supplies with higher bids. The cash market is expected to be mostly steady today.
  • Export demand remains solid for the pork market. Weekly pork sales of 13,600 MT and exports of 11,500 MT were reported.
  • The National Animal Health Laboratory Network reports 247 positive porcine epidemic diarrhea virus (PEDV) cases were reported the week ending March 23, which is down from last week's revised number of cases of 270. The report states, "This maintains the general downward trend in positive case submissions."
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