Ahead of the Open (VIP) -- February 26, 2014

February 26, 2014 02:16 AM

Corn futures are called marginally to 1 cent lower in lackluster trade.

  • Corn futures ended the overnight session marginally to 1 cent lower in light trade amid a lack of fresh news.
  • March corn has posted five straight closes above the important $4.50 level, turning it into initial support.
  • For the first time ever, March oat futures surged above $5.00 and saw followthrough buying this morning. Oats are known as a leading market for corn, which creates some speculative buying interest in corn.
  • News Taiwan has purchased 60,000 MT of U.S.-sourced corn signals prices are still stimulating demand.
  • USDA also announced that an unknown buyer purchased 101,600 MT of U.S. for 2013-14 delivery.


Soybean futures are called 2 to 6 cents lower amid profit-taking

  • Soybean futures ended the overnight session 2 to 6 cents lower amid profit-taking after yesterday's strong gains.
  • March soybeans posted a fresh contract high of $14.00 yesterday and came within a half-cent of that level in overnight trade.
  • Key this morning will be if traders view early weakness as a buying opportunity. Technicals clearly favor bulls.
  • Parana's ag department has trimmed the state's soybean crop from 16.5 MMT to 14.47 MMT due to drought conditions.
  • The combination of declining Brazilian bean estimates and ongoing demand for U.S. soybeans from China are the fuel behind the recent surge in old-crop futures.


Wheat futures at all three exchanges are called 1 to 3 cents lower.

  • HRW futures ended the overnight session mostly 2 cents lower, with HRS mostly 1 cent lower and SRW was 2 to 3 cents lower.
  • Wheat saw spillover pressure from neighboring pit as well as position squaring.
  • Pressure on futures is being limited by concerns about transportation problems in Canada, but fresh demand news is needed to keep futures supported at current levels.
  • Traders are also concerned about winterkill in the Plains due to another blast of cold air threatening the crop that has recently lost its snowcover.


Live cattle futures are called to open higher on followthrough buying.

  • Live cattle futures are expected to see a boost on followthrough from yesterday's gains, as traders recognize fundamentals are bullish.
  • Choice beef values rose 68 cents yesterday and Select firmed $1.31, but only 116 loads of cuts changed hands.
  • But traders aren't overly concerned about demand after last week's Cold Storage Report showed beef stocks in frozen storage below expectations.
  • While this week's showlist in the Southern Plains is up from last week, traders look for feedlots to dig their heels in and demand at least $1 higher for cash cattle from last week's $144 to $145 trade.
  • Feeder cattle futures are called higher on spillover from live cattle and tight supplies.


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

  • Lean hog futures are expected to see a boost this morning from improvement in the pork market as well as bullish technicals.
  • Pork cutout values improved $1.27 yesterday on improved movement of more than 406 loads. This improves packers' profit margins and alleviates concerns about the recent slowdown in demand.
  • As a result, the cash market is expected to be firmer this morning amid strong demand for hogs.
  • Traders also 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.
  • While bulls clearly have control of the market, futures have moved into overbought territory, which signals the upside is overdone.
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