Ahead of the Open (VIP) -- March 12, 2014

March 12, 2014 03:17 AM

Corn futures are called 2 to 5 cents lower on spillover from soybeans.

  • Corn futures ended the overnight session mostly 3 to 4 cents lower on spillover from double-digit losses in the bean market.
  • Key this morning will be if traders view overnight losses as a buying opportunity as funds remain net long.
  • Futures could find light support from news that Brazil's Conab has reduced its peg of the country's corn crop by 290,000 MT to 75.18 MMT.
  • FranceAgriMer has raised its 2013-14 corn ending stocks forecast to 2.9 MMT from 2.8 MMT previously.
  • Uncertainty surrounding the situation in Ukraine should also limit selling as importers have signaled they will favor more reliable suppliers such as the U.S. to meet near-term needs.


Soybean futures are called 10 to 30-plus cents lower amid profit-taking, with nearbys leading losses.

  • Soybean futures ended the overnight session roughly 10 to 40 cents lower, with nearbys leading losses amid profit-taking and a continuation of yesterday's bull spread unwinding.
  • May beans gapped lower and sharply extended losses. A low-range close today would signal a high has been posted.
  • Meanwhile, Brazil's Conab has slashed its forecast for the 2013-14 soybean crop by 5% to 85.44 MMT, citing adverse growing conditions. It forecasts the country's exports at 45.3 MMT, down from its previous peg of 47.7 MMT.
  • But traders say Brazil's crop losses are factored into the market and focus now is on evening positions.
  • Key this morning will be if funds return to defend their large net long position, although it appears they are working on reducing risk.


Wheat futures are called steady to 2 cents lower on light spillover from neighboring pits.

  • All wheat flavors ended the overnight session narrowly mixed amid light profit-taking from yesterday's gains. Two-sided trade was seen overnight.
  • Traders are discounting news that Russia's Agriculture Minister has raised his forecast for the country's 2013-14 grains exports by 2 MMT to 22 MMT.
  • Meanwhile, FranceAgriMer raised its 2013-14 French wheat ending stocks forecast by 350,000 MT to 3.2 MMT due to lower exports.
  • Global grain traders say French wheat is likely to replace Black Sea wheat if tensions slow shipments in the region.
  • Concerns about drought in the U.S. Southern Plains is gaining more attention as the crop begins to come out of dormancy.


Live cattle futures are called to open mixed as traders reevaluate positions.

  • Live cattle are expected to be choppy this morning as traders keep an eye on the hog market and monitor strength in the beef market and tight market-ready supplies.
  • Gains could be hard fought if lean hog futures advance profit-taking seen in electronic trade.
  • Choice beef values surged $2.57 Tuesday to a record $241.47, although movement was light
  • This week's cattle showlist is a little tighter than last week, which gives feedlots more bargaining power, but with packer margins still in the red, starting bids are lower than last week's $148 cash trade.
  • Nearby live cattle are trading at a discount to last week's cash trade, which signals traders believe a near-term cash high has been posted.


Lean hog futures are called to open lower amid profit-taking.

  • Lean hog futures are expected to be weaker this morning amid profit-taking that was seen in electronic trade.
  • Futures are severely overbought and hold a sharp premium to the cash index, which raises the risk of an extended price correction.
  • But fundamentals remain bullish, as pork cutout values surged $2.91 yesterday to rise to a new record of $116.46. Movement was decent at 338.01 loads.
  • The cash hog market is called steady to firmer as many packers are still in need of additional supplies this week.
  • Key today will be if traders view porcine epidemic diarrhea virus (PEDV) concerns as factored into prices or not, as this remains a concern for the industry.
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