Ahead of the Open (VIP) -- April 8, 2013

April 8, 2013 03:13 AM
 

Corn futures are called mixed amid bull spreading.

  • Corn futures ended the overnight session mixed amid bull spreading. May and July futures ended 3 to 4 cents higher and new-crop futures were mostly around a penny lower.
  • Nearby corn futures are expected to benefit from short-covering this morning following last week's losses.
  • Meanwhile, new-crop corn is seeing light pressure this morning due forecasts for a more active rain pattern for the Corn Belt this week. This will provide the western Corn Belt with much-needed rains, but cold soils will prevent producers from getting into fields early this year.
  • Gulf corn basis is steady this morning to stand at 53 cents above May futures for immediate delivery.

 

Soybean futures are called 3 to 10 cents higher, with nearbys to lead gains on bull spreading.

  • Soybean futures ended the overnight session 8 to 11 cents higher in the nearby contacts, with new-crop futures favoring a firmer tone in mixed trade to reflect bull spreading.
  • Old-crop futures are expected to see a lift from short-covering on ideas last week's losses were overdone. But key will be whether those gains are sustained with the start of pit trading.
  • Rains are in the forecast for the Corn Belt this week, which, if realized, would aid still-parched soils across the western Corn Belt. Traders say it's too early to be overly concerned about corn planting delays, but it's certainly on their minds as delays could shift some acres to soybeans.
  • Gulf soybean basis is steady this morning to stand 81 cents above May futures for immediate delivery to suggest no major purchases are ongoing.
  • China has reported 21 cases of the H7N9 strain of bird flu, including six deaths. The situation gained worldwide news headlines over the weekend but traders say as long as the situation remains contained, further downside risk for soybean futures should be limited.

 

Wheat futures are called 2 to 6 cents higher on concerns about the HRW wheat crop.

  • Chicago and Minneapolis wheat ended the overnight session mostly 2 to 4 cents higher, with Kansas City leading gains by trading 3 to 7 cents higher.
  • Kansas City futures are seeing a lift from concerns about the condition of the HRW wheat crop. USDA will release its weekly condition data later this afternoon; it is expected to reflect further deterioration.
  • Meanwhile, traders are watching the weather forecasts closely as there are some freezing temps in the outlook for the Central and Southern Plains.
  • The state-run China National Grain and Oils Information Center confirmed over the weekend the country purchased 14 to 16 cargoes (nearly 1 MMT) of U.S. SRW wheat late last week. This news is already factored into prices, but it raises hope that other countries will follow with stepped up purchases.

 

Live cattle futures are called to open steady to weaker on followthrough from last week's losses.

  • Nearby live cattle futures moved to a discount to last week's $128 cash cattle as traders evened positions ahead of the weekend.
  • Followthrough selling is expected today as traders have adapted a near-term bearish attitude toward demand.
  • All eyes will be on the boxed beef market as traders are watching for clues as to whether retailers are preparing for summer grilling features.
  • Feeder cattle futures are expected to be pressured this morning from strength in nearby corn futures.

 

Lean hog futures are called to open steady to weaker on demand concerns.

  • Lean hog futures are vulnerable to followthrough from last week's late losses due to concerns about pork demand.
  • Friday's monthly employment data renewed concerns about the U.S. economy and its impact on the summer grilling season.
  • Furthermore, the cash hog market is expected to be mostly steady today. While packers are in need of late-week supplies, negative profit margins are limiting demand for cash hogs to start the week.
  • April lean hog futures ended Friday at around a $2 premium to the cash index, which signals traders believe tightening supplies will limit further downside price risk.
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