Ahead of the Open (VIP) -- February 25, 2014

February 25, 2014 02:16 AM
 

Corn futures are called narrowly mixed in lackluster trade.

  • Corn futures ended the overnight session steady to marginally lower amid light trade.
  • March corn futures saw trade below the $4.50 level yesterday amid spreading with soybeans, but closed above the level and remained above it today to signal there is value buying below this important level.
  • There's little fresh news for the market to digest this morning, which is expected to limit price movement.
  • Interior and Gulf basis levels are holding up due to icy conditions on the river that have created a backlog of supplies needed for ships.

 

Soybean futures are called 1 to 3 cents weaker on profit-taking.

  • Soybean futures ended the overnight session 1 to 3 cents lower after yesterday's surge as funds took some light profits.
  • Yesterday's surge in futures resulted in a pickup in farmer selling, which has softened basis at interior locations this morning.
  • However, traders remain concerned about poor late-season conditions for filling soybeans in southern Brazil and are now concerned about crop quality due to rains stalling harvest.
  • Concerns are also building about backlogs at Brazil's ports as beans begin to arrive.
  • This morning USDA announced China has purchased 568,000 MT of old-crop U.S. soybeans, which is especially supportive given the fact Brazil's crop will soon be readily available.
  • After testing $13.90 yesterday in the March contract, technicals remain bullish for old-crop futures.

 

SRW wheat futures are called marginally to 1 cent lower, while other markets are expected to open mixed.

  • SRW wheat futures ended the overnight session steady to around a penny lower while HRW and HRS wheat finished narrowly mixed.
  • Following yesterday's lower start, wheat futures rallied and finished near session highs, which limited selling in overnight trade.
  • A resurgence of cold temps across the Plains is raising concerns about winterkill, especially after warmer conditions recently have exposed the crop and made it more vulnerable to frigid temps.
  • Otherwise, there's little fresh news for the market to digest this morning, with traders in need of fresh demand news.
  • USDA this morning announced that Egypt canceled 110,000-MT in SRW wheat purchases for 2013-14.
  • A slowdown in demand recently reminds traders that U.S. prices are not as competitive as a month ago.

 

Live cattle futures are called to open higher on followthrough buying and strength in the beef market.

  • Live cattle futures are expected to see followthrough from yesterday's gains, as bulls clearly have the near-term technical advantage.
  • Futures are also expected to find support from strength in the product market. Choice beef values surged $2.07 yesterday and Select boxes firmed $1.79. However, packers were only able to move 128 loads of products yesterday.
  • This week's showlist is up a combined 17,000 head from last week in Kansas and Texas, which will reduce packers' willingness to pay up for supplies.
  • But feedlots will dig their heels in after packers were forced to pay up for cash supplies last week.
  • Feeder futures continue to follow the live cattle futures.

 

Lean hog futures are called steady to firmer on strength in the pork market.

  • Lean hog futures are called higher as technicals are still clearly bullish.
  • From a fundamental standpoint, the near-term outlook is also bullish, as traders remain concerned about the spread of the porcine epidemic diarrhea virus (PEDV) and its impact on spring and summer marketings when supplies are at their tightest of the year.
  • Additionally, pork cutout values firmed $1.23 yesterday, but only 234.98 loads changed hands. Pork values have risen to $98.32 per cwt., which is historically high but still a value compared to beef.
  • The cash hog market is called steady to firmer today as packers are short bought coming into the week and are planning on a large Saturday kill given profitable margins.
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