Ahead of the Open (VIP) -- March 10, 2014

March 10, 2014 03:16 AM

Corn futures are called 2 to 6 cents lower as traders even positions.

  • Corn futures ended the overnight session 3 to 6 cents lower amid pre-report position squaring.
  • Traders look for this morning's report to show old-crop corn carryover up around 6 million bu. from last month to 1.487 billion bu. after USDA slashed carryover more than expected last month.
  • While exports remain strong, traders believe USDA will adjust feed usage due to the porcine epidemic diarrhea virus (PEDV) and a reduction in cattle supplies.
  • Traders will also be watching for adjustments to global supply forecasts given concerns about the Brazilian corn crop due to late-season heat and dryness in some areas and excessive rain in others.
  • While focus will be on position squaring, traders are also noting slight strength in the U.S. dollar index this morning as a bearish factor.


Soybean futures are called 3 to 9 cents lower on disappointing Chinese trade data.

  • Soybean futures ended the overnight session 3 to 9 cents lower, although lighter losses were seen in far-deferred contracts.
  • Disappointing economic data from China sparked selling in the commodity market overnight. China unexpectedly posted a trade deficit of $23 billion in February. Traders were expecting a trade surplus of $14.5 billion.
  • Traders expect USDA to trim old-crop soybean carryover by 9 million bu. from last month to be equal to the previous marketing year at 141 million bushels.
  • The tight old-crop stocks situation is the result of strong demand, as the window for the U.S. export season has been extended due to transportation issues in Brazil and rains delaying harvest in Mato Grosso.
  • Traders will also be watching to see if USDA alters its South American crop pegs after many private analysts have slashed their estimates recently due to late-season dryness in southern Brazil, followed by excessive rain.
  • According to officials customs data, China imported 4.81 MMT of soybeans in February, down 18.6% from the previous month but up 65.9% from year-ago.


Wheat futures are called 2 to 6 cents lower on profit-taking ahead of USDA's reports.

  • SRW wheat ended the overnight session mostly 4 cents lower, with HRW down 3 to 5 cents and HRS 5 to 6 cents lower. March SRW wheat was the exception, as it was firmer.
  • Traders' focus is on evening positions ahead of this morning's USDA reports and profit-taking following last week's strong gains.
  • Traders look for USDA to raise old-crop wheat carryover by around 10 million bu. from last month to 568 million bushels.
  • Political tensions in Ukraine continue, but some traders believe USDA could hold off another month before adjusting its demand estimates. Some importers say they are seeking more reliable sources such as U.S. wheat.


Live cattle futures are called to open steady to firmer amid position squaring.

  • Live cattle futures are expected to start the day slightly higher on followthrough from electronic trade.
  • Traders will return to the market to reevaluate positions after last week's increased price volatility.
  • Pressure on futures will be limited by ongoing strength in the boxed beef market and tight supplies. But high beef prices are raising concern about demand.
  • Some traders are hesitant to reestablish or extend their long exposure to the market on ideas the cash market has posted a near-term high, as have futures.
  • Pressure on corn futures this morning should limit spillover weakness in feeder cattle.


Lean hog futures are called to open mixed as traders reevaluate positions.

  • Lean hog futures are expected to see a choppy tone as traders reevaluate positions given the extremely overbought condition of the market and sharp premium futures hold to the cash index.
  • But with technicals clearly bullish and supplies unknown this spring and summer due to PEDV, traders can still build a bullish case for the market.
  • Pork cutout values rose $1.55 on Friday to keep packers' profit margins in the black. Demand for cash supplies is expected to be strong to start the week.
  • As a result, the cash market is called steady to $1 higher today, but milder weather is expected to encourage an increase in marketings this week.
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