Ahead of the Open (VIP) -- March 14, 2014

March 14, 2014 03:18 AM
 

Corn futures are called mixed as traders even positions ahead of the weekend.

  • Corn futures ended the overnight session marginally to 1 cent higher in all but the front-month contract, which ended 1 1/4 cent lower.
  • Traders are focused on evening positions ahead of the weekend referendum in Crimea to join Russia. Concerns such a move would heighten tensions in Ukraine could limit selling in the grain markets.
  • Meanwhile, China's state corn stockpile for 2013-14 had already reached 54.66 MMT recently and is expected at a record 60 MMT by the end of next month, says China National Grain and Oils Information Center. It left its 2013-14 corn import forecast at 5.5 MMT.
  • Gulf corn basis is 1 to 3 cents lower this morning for nearby delivery, which suggests either a slowdown in demand and/or transportation disruptions.

 

Soybean futures are called mixed amid pre-weekend position squaring.

  • Soybean futures ended the overnight session mixed, with March 2 cents lower, but May through August futures 1 to 2 cents higher. New-crop futures ended 2 to 5 cents lower.
  • Traders' focus in the bean pit this week has been on spreading, as bull spread unwinding was the featured activity earlier in the the week, but bull spreading returned yesterday.
  • A grounded ship carrying soybeans is blocking the main waterway at Argentina's top grain port, which is limiting ship movement and adding to transportation delays. Unionized dockworkers are holding a one-day work stoppage at the port.
  • Gulf soybean basis is 1 cent weaker for immediate delivery this morning that could signal a slowdown in demand, but this is more likely a function of recent increased movement of cash supplies to the market.
  • Soybean futures are working on sharp weekly losses, which is the first time in several weeks this has been the case.

 

Wheat futures are called 1 to 3 cents higher as traders remain concerned about political tensions in Ukraine.

  • SRW and HRW wheat ended the overnight session mostly 3 to 4 cents higher, with HRS steady to 1 cent firmer.
  • Traders' focus is on evening positions ahead of the weekend referendum in Crimea on a proposal to join Russia. Such a move is expected to further inflame the Ukrainian crisis.
  • As a result, traders have added premium into wheat futures as traders believe a lengthy period of unrest in the Black Sea region will divert demand to the U.S.
  • Gulf HRW basis is 2 to 5 cents firmer for nearby delivery this morning, with SRW basis steady in all but May, which is 5 cents softer.
  • Wheat futures are working on strong weekly gains and have further improved the near-term technical outlook for the market.

 

Live cattle futures are called to open mixed as traders even positions ahead of the weekend.

  • Live cattle are expected to be choppy with an upside bias as traders wait on active cash trade to develop.
  • Reports of light cash trade in Kansas yesterday at $148.50 are surfacing, which is up just 50 cents from last week. Cash sources say this light movement doesn't set a precedent for remaining feedlots.
  • Choice beef values slipped 21 cents yesterday and Select rose 11 cents on movement of 114 loads. But beef prices are higher than a week ago.
  • April live cattle ended yesterday at nearly a $5.00 discount to the start of this week's cash market as traders believe a near-term high has been posted in the cash market.
  • March feeder futures are trading in line with the cash index, which is down 10 cents from the previous day's all-time high.

 

Lean hog futures are called to open steady to slightly higher amid ongoing strength in the pork market.

  • Lean hog futures are expected to build on yesterday's sharp to limit higher price performance given ongoing strength in the pork market.
  • Pork cutout values firmed another $1.12 yesterday, but movement slowed to 268.69, which signals the record-rise in pork prices is curbing demand.
  • While slowed pork demand is a sign a high may be near, traders remain concerned about the spread of PEDV, as the virus continues to spread.
  • Week-to-date slaughter is running 2.7% behind year-ago, which means packers are still seeking supplies for a Saturday kill.
  • As a result, the cash hog market is expected to be mostly $1 higher again today.
  • The CME lean hog index rose $1.59 to stand at $109.16, but April futures hold around a $10 premium to the index.
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