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Ahead of the Open (VIP) -- February 28, 2014

08:17AM Feb 28, 2014

Corn futures are called steady to 2 cents higher on weakness in the dollar index.

  • Corn futures ended the overnight session mostly a penny higher on position squaring and help from sharp weakness in the U.S. dollar index.
  • Also supportive this morning is news of an 101,600-MT corn sale to an unknown buyer for 2013-14.
  • But with little other fresh news for the market to digest, traders' focus will be on position squaring as they close their books for the month.
  • Given improvements to demand and better technicals this month, pressure on corn should be limited.
  • Gulf corn basis is 2 cents firmer for March delivery to reflect strong demand.

 

Soybean futures are called mixed amid bull spreading.

  • Nearby soybeans ended the overnight session 2 to 8 cents higher, with deferreds favoring a firmer tone in mixed trade.
  • Following yesterday's highly volatile day of trade, traders' focus will be on position squaring as they close their books for February.
  • Price action overnight was more volatile than usual, but March beans returned above the important $14.00 level. Key this morning will be if traders view this as a buying opportunity given crop and transportation concerns in South America.
  • Also this morning, USDA announced an optional-origin soybean sale of 120,000 MT to Egypt for 2014-15.
  • Gulf soybean basis is mixed this morning, as it's 5 cents higher for March delivery and down 2 cents for April delivery.

 

Wheat futures are called mostly 2 to 6 cents higher amid short-covering.

  • SRW futures ended the overnight session 3 to 9 cents higher, with HRW up 2 to 6 cents. HRS ended marginally to 10 cents higher.
  • Futures enjoyed short-covering after funds took profits yesterday.
  • Wheat is also seeing support from sharp weakness in the U.S. dollar index, as it helps to improve the U.S.'s competitiveness on the global market.
  • But upside potential will be limited by the recent slowdown in export demand, as traders say they need to be convinced prices are stimulating demand.
  • Gulf SRW basis is 4 cents firmer this morning for March delivery and HRW basis is steady.

 

Live cattle futures are called mixed amid position squaring.

  • Live cattle futures are called mixed as traders even positions ahead of month-end.
  • But pressure will be limited amid bullish fundamentals.
  • Boxed beef values continue to surge, with Choice values up $2.46 and Select up $2.33. Movement was a modest 137 loads.
  • Cash cattle trade has been limited so far this week at a record $150 in the Southern Plains and $152 in Nebraska.
  • While a light round of cash trade could be seen today, cash sources believe the bulk of this week's business is complete.
  • February live cattle will expire at noon, CT, which is expected to maintain a high level of price volatility. April live cattle will soon become the lead-month contract and they hold more than a $5 discount to this week's cash.

 

Lean hog futures are called mixed as traders focus on evening positions.

  • Lean hog futures are expected to see a choppy start as focus is on evening positions as traders close their books for the month.
  • There is risk of profit-taking as nearby futures are trading at a sizable premium to the cash index and are overbought.
  • But strength in the pork cutout market keeps bulls' attitudes roaring. Pork cutout values surged $2.05 yesterday to keep packers' profit margins in the black.
  • But only 305.68 loads of pork changed hands, which suggests carcass values, at $101.88 per cwt., have reached a level that is slowing demand.
  • The cash market is called steady to firmer as packers are in need of supplies for their Saturday kill.
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