Ahead of the Open (VIP) -- April 9, 2013

April 9, 2013 03:16 AM
 

Corn futures are called mixed amid bull spreading.

  • Old-crop corn futures ended the overnight session marginally to 3 cents higher, with new-crop futures down marginally to a penny.
  • Bull spreading has been the dominant trend in the market so far this week as traders work to even positions ahead of tomorrow's Supply & Demand Report. According to pre-report expectations, traders expect USDA to raise 2012-13 corn carryover by around 190 million bu. from last month to reflect the slowdown in usage.
  • Gulf corn basis firmed 2 cents for immediate delivery to stand 56 cents above May futures to reflect a tightening of supplies or a fresh demand.
  • An active weather pattern continues for the Corn Belt, with rains moving across the western Corn Belt today and another system expected to enter the region tomorrow. This is providing much-needed moisture, but it will keep producers from an early start to corn planting.

 

Soybean futures are called mixed after choppy overnight trade.

  • Old-crop soybean futures ended the overnight session 1 to 2 cents lower, with new-crop futures mixed.
  • A downward revision in China's import forecast from the China National Grain and Oil Information Center is weighing on old-crop soybean futures. The state-run firm lowered its forecast by 1 MMT to 59 MMT for 2012-13 due to reduced soymeal demand due to bird flu and weak hog prices.
  • But on an a more positive note, China's consumer price inflation came in lower than expected, at a 2.1% annual rate in March versus expectations of a 2.4% rise. This will be a bullish underlying factor for the raw commodity sector.
  • Traders will also be focused on evening positions ahead of tomorrow's Supply & Demand Report that is expected to show around a 12 million bu. increase in carryover from last month.

 

Wheat futures are called 2 to 4 cents lower in reaction to slight improvement in the condition of the winter wheat crop.

  • Chicago wheat futures ended the overnight session 2 to 8 cents lower, with Kansas City and Minneapolis down mostly 1 to 2 cents.
  • Yesterday's USDA Crop Condition Report showed slight improvement in the winter wheat crop rated in the top two categories from last month, but our weighted Crop Condition Index reveals the HRW wheat crop deteriorated from last week and the SRW crop improved.
  • Additional pressure is being seen due to expectations tomorrow's Supply & Demand Report will reflect around a 15-million bu. increase in carryover from last month.
  • Weakness in the U.S. dollar index is helping to limit pressure on the wheat pit.

 

Live cattle futures are called to open steady to firmer on help from outside markets.

  • Weakness in the U.S. dollar index this morning is lifting crude oil and gold futures, which is expected to spill over into live cattle futures this morning.
  • But bullish attitudes will be tempered by ongoing beef demand concerns. Choice beef values slipped 37 cents and Select declined 55 cents, but movement improvement improved to 177 loads yesterday.
  • Traders want to see beef movement pick up even more before they will be convinced grilling season is off to a solid start.
  • This week's market-ready cattle supplies are down from last week, but cash opinions are still up in the air as packers want to improve their bottom line.

 

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

  • Lean hog futures are expected to be weaker this morning on concerns about pork demand, which is pressuring the cash hog market.
  • Packers have seen their profit margins deteriorate, which is softening demand for cash hog supplies. The cash market is called steady to weaker today.
  • Pork cutout values firmed just a penny in the voluntary reported market yesterday
  • April lean hog futures are trading in line with the cash index, which could limit today's price volatility.
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