Ahead of the Open (VIP) -- April 9, 2014

April 9, 2014 03:20 AM

Corn futures are called to open mixed amid light trade ahead of this morning's April Supply & Demand (S&D) Report.

  • Corn futures ended the overnight session mixed, with nearbys marginally higher and deferreds mostly 2 to 4 cents lower amid light profit-taking.
  • Traders' focus is on evening positions ahead of this morning's USDA reports.
  • 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.
  • Pressure on corn should be limited as long as soybean futures continue to strengthen.
  • May corn has established $5.00 level as support after closing above it yesterday. The contract is trading just beneath the April high of $5.12 1/2.


Soybean futures are called to open 4 to 12 cents higher amid bull spreading.

  • Soybean futures ended the overnight session 4 to 12 cents higher, with nearbys leading gains amid bull spreading.
  • Traders expect USDA to trim its old-crop soybean carryover estimate from last month after the March 1 stocks data showed a continued strong usage pace.
  • According to pre-report trade guesses, the market looks for USDA to trim carryover by around 6 million bu. from last month to a tight 139 million bushels.
  • Bulls have strengthened their technical advantage, with May soybeans posting a contract high of $14.98 1/4 overnight. Key this morning is whether or not bulls can move above this level, as the area has served as tough resistance in past rallies.
  • Keep in mind traders have a bullish report factored into prices.


All wheat flavors are called to open 3 to 6 cents higher on renewed concerns about the winter wheat crop.

  • All wheat flavors ended the overnight session 3 to 6 cents higher as traders factored in the first crop condition report of the season.
  • As expected, yesterday's crop condition report from USDA reflected sharp declines made to the winter wheat crop in the Plains over the winter.
  • Our first weighted Crop Condition Index of the season shows the HRW crop down 64 points from last fall to 299, while the SRW crop declined 30 points to 348 (scale of 0 to 500 points, with 500 representing perfect).
  • Traders are also putting their finishing touches on positions ahead of this morning's S&D Report. USDA 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.
  • Meanwhile, FranceAgriMer raised its 2013-14 soft wheat ending stocks forecast by 100,000 MT to 3.3 MMT due to lower exports within the EU.


Live cattle futures are called to open mixed as traders wait on clearer direction from the cash market.

  • Live cattle futures were narrowly mixed in overnight trade, with nearbys slightly firmer due to the discount those contracts hold to the cash market.
  • But active cash trade isn't expected until later in the week as bids and asking prices are several dollars apart.
  • Due to a larger showlist and a softening tone in the cash market, the cash market is expected to be $1 to $2 lower compared with last week's $148 to $150 trade.
  • Choice beef values dropped another 94 cents yesterday to $226.99 per cwt., while Select cuts firmed 98 cents to $216.97 per hundredweight. Movement improved to 167 loads, signaling prices could be nearing a low, although beef still isn't a "value" compared to pork and poultry.
  • Feeder futures are also expected to be mixed ahead of this morning's USDA S&D Report.


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

  • Lean hog futures saw sharp followthrough pressure in overnight electronic trade to signal similar losses are in the cards for the start of pit trade this morning.
  • Traders continue to lighten their long exposure to the market after a historic rally that ended in late March.
  • Traders believe the worst is behind in terms of pig-related porcine epidemic diarrhea virus (PEDV) losses, although supplies will remain tighter-than-previously expected through the year.
  • Despite tighter supplies, packer demand for cash hogs has softened as pork cutout values continue to decline. As a result, the cash market is called steady to $1 lower again this morning.
  • Traders are comfortable with the sharp discount nearbys hold to the cash index as they expect the cash market to continue softening.
  • Yesterday, pork cutout values softened just 5 cents and movement was again light at 308.56 loads. Gains in hams and ribs were offset by weakness in loans, butts and picnics.
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