Ahead of the Open (VIP) -- March 13, 2014

March 13, 2014 03:18 AM

Corn futures are called steady to 1 cent higher in lackluster trade.

  • Corn futures ended the overnight session marginally to 1 cent higher in lackluster trade as the market is hungry for fresh news.
  • This morning's weekly sales report from USDA doesn't provide much for bulls or bears, as sales of 683,400 MT for 2013-14 and 103,600 MT for 2014-15 were within expectations.
  • Meanwhile, Gulf corn basis is steady to 2 cents higher for near-term delivery to signal still-strong export demand.
  • Following Monday's USDA S&D Report, traders have largely moved to the sidelines as they collect guidance for the March 31 Prospective Plantings Report.


Soybean futures are called 1 to 5 cents higher amid bull spread unwinding.

  • Soybean futures ended the overnight session marginally higher in the nearby contracts, with new-crop futures up mostly 3 to 5 cents as bull spread unwinding has been a featured activity this week.
  • Reuters is reporting this morning that China has canceled 10 cargoes (up to 600,000 MT) of soybean purchases from South America, as widely rumored yesterday. Export sources say China is looking to cancel or delay another 30 cargoes of soybean commitments because of weak demand and poor crush margins.
  • This comes amid additional poor economic news from China, as industrial output and retail sales the first two months of the year came in lower than expected at 8.6% and 11.8% above year-ago, respectively.
  • USDA reports weekly soybean sales of 113,500 MT for 2013-14 and 776,900 MT for 2014-15, which topped expectations.
  • Gulf soybean basis is 12 cents lower for immediate delivery and 3 to 4 cents lower for April through June delivery.


Wheat futures are called 2 to 5 cents higher amid ongoing concerns about the winter wheat crop and the situation in Ukraine.

  • SRW wheat ended the overnight session mostly 2 to 3 cents higher, with the March contract up a dime. HRW was mostly 3 to 4 cents higher, with HRS up 5 to 7 cents overnight.
  • Traders continue to talk about ongoing drought, with this week's National Drought Monitor reflecting a slight expansion and increase in intensity of drought conditions in the Central and Southern Plains.
  • Meanwhile, ongoing tensions in Ukraine have traders on their toes, as the situation could improve demand for U.S. wheat.
  • Adding to the positive export outlook is this morning weekly sales report, as it showed wheat sales of 476,900 MT for 2013-14 and 89,200 MT for 2014-15, which topped expectations.
  • HRW Gulf wheat basis is steady, with SRW basis 10 cents lower for May delivery. Other SRW delivery months are steady to 4 cents lower.


Live cattle futures are called to open mixed as traders wait on cash trade to develop.

  • Live cattle are expected to be mixed in lackluster trade this morning, as traders wait on clearer direction from the cash market.
  • Traders are waiting on cash cattle trade to develop, with feedlots hoping for higher prices given tighter showlists and strength in the beef market that has led to improved packer margins.
  • Meanwhile, packers have been hesitant to raise bids, but most are expecting at least steady to $1 higher trade compared with last week's $148 trade in the Southern Plains.
  • Choice beef values were up 4 cents yesterday to $241.51, as prices have improved $7.00 in the latest five-day period.
  • The CME feeder index has risen to a record of $173.70 and March futures are trading in line with the index.


Lean hog futures are called to open steady to slightly higher as bulls return to mildly defend positions.

  • Lean hog futures are expected to be steady to firmer this morning as bulls return to defend long positions after yesterday's pullback in nearby and far-deferred contracts.
  • Adding to the positive tone is strength in the pork market, as cutout values surged $3.04 yesterday and are up $11.67 in the latest five-day period to a record $119.50.
  • With packers' profit margins improving this week, the cash market is expected to be steady to firmer this morning.
  • The CME lean hog index stands at a record $107.57 but April futures ended yesterday at around an $8.35 premium to the index.
  • While April lean hog futures have "stalled" just beneath the high, the contract remains severely overbought according to the Relative Strength Index. Bulls still hold the near-term advantage.
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