Ahead of the Open (VIP) -- March 11, 2014

March 11, 2014 03:17 AM

Corn futures are called mixed as traders reevaluate positions.

  • Corn futures ended the overnight session narrowly mixed amid light trade.
  • Following yesterday's bearish reaction to positive USDA data, traders are reevaluating positions this morning.
  • While traders expected USDA to raise old-crop corn carryover yesterday, the agency trimmed the figure by 25 million bu. due to an increase in its export forecast.
  • But there's little other fresh news for the market to digest, which has resulted in some traders moving to the sidelines ahead of the March 31 Prospective Plantings Report.
  • Traders are also keeping a close eye on technicals, which remain positive, as May corn is respecting the 14-day moving average.


Soybean futures are called mixed amid bull spread unwinding.

  • Old-crop soybean futures ended the overnight session marginally lower, with new-crop up 2 to 6 cents amid bull spread unwinding.
  • Traders are reevaluating positions after futures posted losses after USDA didn't trim old-crop carryover as much as expected yesterday.
  • But at 145 million bu., carryover for 2013-14 is tight and there is risk USDA will have to increase its export forecast again given the very aggressive export bookings pace and a lack of significant sales cancellations.
  • May soybean futures spent the overnight session pivoting around yesterday's low and testing uptrending support. Key this morning will be if funds return to defend their very large net long position.


SRW and HRW wheat futures are called 1 to 3 cents higher, with HRS expected to see mixed trade.

  • SRW wheat ended the overnight session mostly 2 to 3 cents higher, with HRW up 1 to 2 cents. HRS favored a firmer tone in mixed trade.
  • HRW futures were supported by ongoing dryness in the Southern Plains, which raises concerns about the crop as it comes out of dormancy.
  • Traders still have yesterday's USDA reports on their minds, in which the agency left 2013-14 carryover unchanged.
  • Despite a positive report, funds were active sellers yesterday. As a result, today's price action could be telling of near-term strength or weakness.
  • Otherwise, there's little other news for the market to digest this morning, as traders say the Ukrainian situation is factored into the market, unless there are new developments.


Live cattle futures are called to open steady to firmer amid strength in the beef market.

  • Live cattle futures are expected to be stronger this morning on strength in the beef market and spillover from the lean hog pit.
  • Boxed beef prices continue to surge, with Choice values up $2.88 yesterday at $238.90 per cwt. -- approaching record levels. However, movement was light at just 105 loads.
  • But after the cash market traded $2 lower last week at $148, traders are hesitant to extend long positions on concerns about packer demand given negative margins.
  • However, technicals remain in bulls' favor, as uptrends remain in place.
  • Meanwhile, March feeder futures are trading at a small premium to the cash index, which stands at $173.34.


Lean hog futures are called to open higher on followthrough buying and strength in the pork market.

  • Lean hog futures are expected to see followthrough after futures posted sharp to limit gains yesterday.
  • Pork cutout values surged another $2.42 yesterday, but movement was light at 218 loads.
  • But strength in the pork market keeps packer profit margins in the black, providing incentive to keep the cash market steady to higher.
  • While technicals and fundamentals are bullish, there is risk of profit-taking at any time, especially with futures trading at a steep premium to the cash index.
  • April lean hogs hold around a $11 premium to the cash index, which stands at $104.73.
  • Traders continue to point to concerns about the porcine epidemic diarrhea virus (PEDV) tightening supplies this spring and summer -- when supplies are seasonally the tightest -- as a major reason for the surge in futures.
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