Ahead of the Open (VIP) -- February 24, 2014

February 24, 2014 02:16 AM
 

Corn futures are called 2 to 4 cents lower amid spreading with soybeans.

  • Corn futures ended the overnight session 2 to 4 cents lower on spreading with soybeans and on profit-taking.
  • March corn has slipped back below the $4.50 level after posting a weekly close above it. Key this morning will be if traders return as buyers and view the overnight price break as a buying opportunity.
  • Corn is also seeing pressure from rains over the weekend in areas of Brazil, as traders believe soil moisture recharging could encourage more producers to plant a second-crop of corn after soybeans are harvested.

 

Soybean futures are called 5 to 15 cents higher, with nearbys leading gains.

  • Soybean futures ended the overnight session with double-digit gains in nearby contracts and light gains in deferred contracts.
  • Bullish attitudes continue to propel nearby soybean futures higher. March beans pushed above the September high in overnight trade.
  • Rains over the weekend across northern production areas of Brazil stalled harvest and have raised concerns about crop quality. Traders also note backlogs at Brazilian ports as keeping demand for U.S. soybeans solid.
  • Traders are ignoring a return to favorable conditions in southern Brazil, which is helping to stabilize the filling crop there, as traders focus on the tight old-crop U.S. stocks situation.

 

SRW wheat is called 1 to 3 cents lower, with HRW and HRS down 3 to 5 cents.

  • SRW wheat futures ended the overnight session 1 to 4 cents lower, with HRW and HRS mostly 4 to 5 cents lower.
  • Wheat was pressured overnight by profit-taking after futures posted strong gains last week.
  • Wheat traders have factored in expected improvement in demand for U.S. wheat given Canada's ongoing logistic issues, but the market needs a dose of demand news to keep prices supported.
  • Market bulls are fearful U.S. wheat has become noncompetitive on the global market after the recent strong rally from recent lows.
  • Another cold snap is forecast for the Plains' wheat areas later this week, which raises concerns about winterkill (again).

 

Live cattle futures are called to open mixed in reaction to Friday's Cattle on Feed Report.

  • Live cattle futures are expected to see a choppy start after Friday's Cattle on Feed Report showed all three categories on the negative side of expectations.
  • The report pegged On Feed at 97%, Placements at 109% and Marketings at 95% of year-ago levels. But with On Feed below year-ago, it reminds the market of the tightening supply situation. The report is expected to result in bull spreading.
  • Nearbys should also be supported by Friday's positive Cold Storage Report that showed total frozen beef stocks at the end of January below expectations.
  • February live cattle are trading in line with last week's $144 to $145 cash trade, which was up $2 to $3 from the previous week.
  • A weaker tone in the corn market is supportive for feeder futures.

 

Lean hog futures are called steady to weaker on Friday's bearish Cold Storage Report.

  • Lean hog futures are expected to see a weaker start after Friday's Cold Storage Report showed pork stocks at the end of January well above expectations.
  • At 623.714 million lbs., traders are reminded that pork stocks are well above year-ago levels, which raises concerns about demand.
  • But the rise in hog weights over year-ago is also behind the rise in pork stocks.
  • Pork cutout values firmed 17 cents on Friday, but movement was a light 229.15 loads.
  • Lean hog futures are also vulnerable to profit-taking given the severely overbought condition of the market after futures surged higher last week.
  • The cash hog market is called steady to firmer as packers are in need of supplies and margins remain profitable.
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