Ahead of the Open (VIP) -- April 4, 2014

April 4, 2014 03:23 AM
 

Corn futures are called to open 1 to 3 cents lower on light profit-taking.

  • Corn futures ended the overnight session mostly 2 to 3 cents lower in lackluster trade.
  • Although there's been plenty of news to direct corn futures this week after USDA's Monday reports and a strong showing in the weekly export sales data yesterday, there's little fresh news this morning.
  • Traders aren't surprised, but they are somewhat disappointed China says it is still in the process of evaluating MIR 162, meaning it's still on the "unapproved" list.
  • While old-crop corn futures are well off weekly highs, contracts are still working on solid weekly gains. New-crop futures are near weekly highs.
  • December corn spent the overnight session pivoting around the key $5.00 level.
  • Pressure on new-crop corn is being limited by winter weather across the Upper Midwest and a cooler-than-normal near-term outlook.

 

Soybean futures are called to open 1 to 5 cents higher.

  • Soybean futures ended overnight trade mostly 1 to 3 cents higher, which was off the session highs.
  • Futures are working on strong weekly gains, which raises the risk of light profit-taking as traders even positions ahead of the weekend.
  • Old-crop futures continue to be supported by the window on U.S. exports being open longer than usual. As a result, traders expect USDA to trim its 2013-14 carryover peg in next week's Supply & Demand Report.
  • Gulf soybean basis is a penny firmer for immediate delivery to reflect the tight supply situation.
  • November soybean futures spent the overnight session pivoting around the key $12.00 level. A weekly close above this psychological level would turn it into initial support.

 

All wheat flavors are called to open 9 to 12 cents lower on rains in the Plains.

  • SRW wheat ended the overnight session mostly 9 cents lower, with HRS down 11 to 12 cents and HRS down 9 to 10 cents.
  • Traders are taking more weather premium out of the market due to recent rains in the HRW Wheat Belt and forecasts that call for more regular precip.
  • But with drought still covering the entire HRW Wheat Belt, well-timed rains will be needed to improve crop condition ratings.
  • Otherwise, there's little fresh news for the market to digest and traders are beginning to look toward next week's USDA S&D Report.
  • A higher-than-expected wheat stocks figure has traders looking for an increase in old-crop carryover.

 

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 tone this morning as traders wait on clearer direction from the cash market.
  • April live cattle ended the day yesterday at around a $5 discount to this week's expected cash trade.
  • Traders look for cash trade around $150 in the Southern Plains, which would be $2 lower than last week due to a slightly larger showlist and weakness in the beef market. But feedlots are still demanding steady money with week-ago.
  • Packers, who have seen margins erode this week, have the upper hand in cash negotiations, especially after Choice beef values softened $1.69 yesterday and Select prices dropped $2.25. However, movement improved to 175 loads.
  • A softer tone in the corn market should limit selling in feeder futures this morning.

 

Lean hog futures are called to open lower on followthrough selling.

  • Lean hog futures were sharply lower in overnight electronic trade to signal bears have the advantage heading into the start of morning trade.
  • Fundamental pressure this morning is expected to come from a sharp drop in pork cutout values, which is slowing demand for cash supplies. Pork values plunged $3.42 yesterday on less than impressive movement of 381.48 loads.
  • The cash hog market is expected to be steady to lower as packers work to improve margins that have slipped into the red.
  • Traders are also taking note of the slowdown in reported porcine epidemic diarrhea virus (PEDV) cases, as they say this is a sign the spread of the disease has peaked.
  • Meanwhile, April lean hog futures ended the day yesterday at around a $5 discount to the cash index. This could limit pressure, but signals traders believe the cash market has topped.
  • The market will also digest news China has enacted "temporary restrictions" on U.S. pig imports to prevent PEDV from spreading to its herd, according to Bloomberg.
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