Ahead of the Open (VIP) -- February 20, 2014

February 20, 2014 02:17 AM
 

Corn futures are called 1 to 2 cents lower amid light profit-taking.

  • Corn futures ended the overnight session mostly 1 to 2 cents lower on profit-taking following yesterday's gains.
  • March corn posted its first close above $4.50 yesterday since late October and remained above that key level in overnight trade.
  • New-crop futures could see a boost this morning from USDA's lower projected acreage number. At its Outlook Forum, USDA says it sees 2014 corn acreage at 92 million, down from 95.4 million in 2013. It projects an average corn price for 2014-15 of $3.90, down from $4.50 in 2013-14.
  • Traders are lacking fresh demand news this morning, as USDA's weekly export sales data is delayed until tomorrow due to Monday's holiday.
  • However, Gulf corn basis is 2 cents firmer for immediate delivery to stand 84 cents over March futures.

 

Soybean futures are called 2 to 5 cents lower in old-crop contracts and steady to 2 cents lower in new-crop contracts.

  • Soybean futures ended the overnight session 2 to 5 cents lower in old-crop contracts on profit-taking. New-crop futures finished mostly firmer overnight, but are expected to open with a weaker tone this morning.
  • New-crop futures are likely to feel pressure this morning after USDA projected 2014 soybean acreage at 79.5 million, up from 76.5 million in 2013. At its Outlook Forum, USDA said it expects an average cash price of $9.65, down from $12.70 in 2013-14.
  • Futures are also being pressured by more rains in the near-term forecast for dry areas of southern Brazil, although crop watchers in the region say some irreversible damage has already been done to filling soybeans.
  • Gulf soybean basis is steady to 3 cents higher for nearby delivery to signal demand remains solid.

 

Wheat futures are called 1 to 2 cents lower on light profit-taking.

  • SRW futures led overnight losses with contracts finishing around 2 cents lower. HRW and HRS futures were mostly around a penny lower.
  • Spillover from corn and beans, along with strength in the U.S. dollar index is price-negative.
  • Pressure should be limited by a slight spread in drought conditions across the Central and Southern Plains.
  • At its Outlook Forum, USDA said it expects 2014 all-wheat acreage at 55.5 million, down from 56.2 million in 2013. It projects an average cash wheat price of $5.30, down from $6.80 in 2013-14.
  • Gulf SRW and HRW basis is steady this morning.

 

Live cattle futures are called steady to higher on strength in the boxed beef market and bullish cash hopes.

  • Live cattle futures are called to open steady to higher due to ongoing strength in the wholesale beef market.
  • Choice boxed beef values have firmed $5.80 over the last week amid improved movement. Combined with tighter market-ready supplies this week, traders look for the cash market to be $1 to $2 higher than last week.
  • A winter storm moving into the country's midsection is also supportive for the market, as it will limit livestock movement the remainder of the week.
  • Traders are also beginning to even positions ahead of tomorrow afternoon's Cattle on Feed Report, which is expected to show On Feed at 96% of year-ago levels.
  • A weaker tone in the corn market is supportive for feeder futures this morning.

 

Lean hog futures are called steady to firmer on weather concerns.

  • Lean hog futures are expected to see a boost from weather concerns, as winter weather will slow hog movement the remainder of the week.
  • Packers that are able to secure supplies today will have to raise bids to do so due to tighter market-ready supplies and weather disruptions.
  • The pork cutout value softened $1.03 yesterday, but have risen $3.71 over the last week to keep packers' profit margins well into the black.
  • Traders continue to be concerned with PEDV. The National Animal Health Laboratory Network's latest report shows the total number of new cases down from the previous week, but still at an elevated level.
  • However, lean hog futures are overbought, which raises the risk of profit-taking.
     
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