Ahead of the Open (VIP) -- April 7, 2014

April 7, 2014 03:17 AM
 

Corn futures are called to open steady to 2 cents lower amid a lack of fresh news.

  • Corn futures ended the overnight session mostly 1 to 2 cents lower, with the May contract pivoting around the all-important $5.00 level.
  • Traders are beginning to prepare for Wednesday's USDA Supply & Demand Report. Traders expect USDA to trim carryover after the March stocks report revealed demand was more robust than expected.
  • Additionally, this morning's export inspections report is expected to reflect strong demand, which could provide the market with a midmorning boost.
  • A weaker U.S. dollar index is helping to limit selling in the corn market.

 

Soybean futures are called to open mixed amid bull spreading.

  • Old-crop soybean futures ended the overnight session 2 to 5 cents higher,with new-crop futures fractionally to 1 cent weaker amid bull spreading.
  • The tight old-crop stocks situation continues to support nearby futures, as traders expect USDA to trim its 2013-14 carryover estimate in this week's monthly Supply & Demand update.
  • News that Brazilian beans have arrived at the U.S. Gulf is being largely ignored by the market. Traders expect more shipments due to tight old-crop supplies.
  • Also this morning, USDA announced China purchased 120,000 MT of new-crop U.S. soybeans.
  • May soybean bean futures saw limited trade overnight. Key this morning will be if funds return to defend their large net long position.

 

All wheat flavors are called to open 4 to 6 cents higher amid short-covering.

  • All wheat flavors ended the overnight session mostly 4 to 6 cents higher on short-covering and disappointing weekend rains in the Southern Plains.
  • Weekend rains were scattered across the Plains, which is a disappointment after traders priced in more widespread showers.
  • More scattered showers are in the forecast for the week, although no drought-busting rains are expected.
  • Traders are covering short positions ahead of the first official crop condition ratings of the spring by USDA this afternoon. State data released through the winter points to crop deterioration in the HRW Wheat Belt.
  • Russia's ag ministry says the country exported more than 2 MMT of grain last month, including nearly 1.3 MMT of wheat.

 

Live cattle futures are called to open mixed on the possibility of short-covering.

  • Live cattle futures are expected to start the week mixed on a combination of weakness in the beef market and ideas last week's losses were overdone.
  • Choice beef values finished the week $3.21 lower on Friday and Select was $4.04 lower. But movement was decent at 166 loads.
  • Traders say this is further evidence the beef market has topped, although others counter tight market-ready supplies and the discount nearbys hold to the cash market should limit pressure on futures.
  • Only light cash trade around $150 was reported in the Southern Plains last week, which points to a slight increase in showlists this week.
  • April live cattle ended last week at around a $7 discount to the cash market, which signals traders have near-term cash weakness priced into the market.

 

Lean hog futures are called to open mixed as traders reevaluate positions.

  • Lean hog futures are expected to start the week mixed, with pressure limited by the discount nearbys hold to the cash index.
  • But slackened demand for cash hogs will limit buying. The cash market is called steady to $1 lower as packers work to improve margins.
  • April lean hog futures ended last week at around a $7 discount to the cash index, which has traders reevaluating positions.
  • A building case the market has posted a high has reduced speculative interest in buying lean hog futures.
  • Meanwhile, pork cutout values firmed 92 cents on Friday, but movement was a light 228.38 loads.
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