Ahead of the Open (VIP) -- April 8, 2014

April 8, 2014 03:18 AM

Corn futures are called to open steady to 3 cents lower amid light profit-taking.

  • Corn futures ended the overnight session mostly 2 cents lower amid profit-taking ahead of tomorrow's USDA report.
  • Futures were also pressured by news that China has officially cleared the way for large-scale Brazilian corn imports.
  • Meanwhile, the U.S. ag attaché in China expects the country to import 4 MMT of corn in 2013-14, 1 MMT lower than USDA's official forecast. The attaché expects China to import 3 MMT of corn in 2014-15 due to bulging domestic supplies.
  • While traders are taking profits ahead of tomorrow's USDA report, pressure should be limited as traders expect the report to reflect a tightening supply situation.
  • According to pre-report expectations, traders look for USDA to trim old-crop corn carryover by around 53 million bu. from last month to a still-plentiful 1.403 billion bushels.


Soybean futures are called to open steady to 2 cents lower amid lackluster trade.

  • Soybean futures didn't stray too far from unchanged in overnight trade. Futures ended fractional to 2 cents weaker in most contracts.
  • Traders are focused on evening positions ahead of tomorrow's USDA report, in which they expect USDA to trim carryover by around 6 million bu. from last month to a razor-thin 139 million bushels.
  • Otherwise there's little fresh news for the market to digest this morning. Firmer basis levels are helping to limit pressure this morning as freight costs have eased and farmer grain movement has been light.
  • Bulls still hold the near-term technical advantage. Key today will be how comfortable traders are with positions ahead of tomorrow's reports.


All wheat flavors are called to open 2 to 4 cents lower on light profit-taking.

  • All wheat flavors ended the overnight session 2 to 4 cents lower on profit-taking following yesterday's gains.
  • Futures rose yesterday on disappointing weekend rains in the Plains, but traders aren't overly concerned about the crop as there is more scattered precip in the near-term forecast.
  • USDA delayed its national crop condition ratings until this afternoon, but state data was still released and it points to continued deterioration of the HRW wheat crop.
  • Traders are also evening positions ahead of tomorrow's April Supply & Demand Report, which will incorporate the March 1 stocks data that came in larger than expected. As a result, traders look for 2013-14 wheat carryover to rise by around 25 million bu. to 583 million bu. -- still much tighter than last season.


Live cattle futures are called to open slightly higher on short-covering.

  • Live cattle futures are expected to see light followthrough buying this morning amid short-covering.
  • Nearby futures are trading at a steep discount to last week's $150 cash cattle trade, which is encouraging position squaring.
  • But upside potential will be limited by concerns about the beef market and its impact on packers' demand for cash supplies. Choice values slipped 81 cents yesterday and Select softened $1.38. Movement was notably light at 110 loads.
  • With this week's showlist larger in the Plains, and the beef market continuing to soften, expectations are for $1 to $2 lower cash cattle trade later this week.
  • Weakness in the corn market should limit selling in the feeder pit this morning.


Lean hog futures are called to open weaker on concerns about the pork market.

  • Following yesterday's late-session recovery, lean hog futures were softer in electronic trade, which points to profit-taking continuing this morning.
  • Futures are expected to see pressure from yesterday's softer start to the pork market. Values slipped $1.11 yesterday to further tighten packers' profit margins.
  • Traders say if pork values continue to soften it would strongly suggest a near-term high has been posted, as it reflects weaker retailer demand ahead of grilling season.
  • The cash hog market is called steady to weaker amid softer demand for cash hogs. Packers have scaled back kill requirements to improve margins and to adjust to the tighter supply situation.
  • Pressure on futures, however, should be limited by the sharp discount nearbys hold to the cash index.
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