Ahead of the Open (VIP) -- March 17, 2014

March 17, 2014 03:06 AM
 

Corn futures are called to open 6 to 8 cents lower this morning.

  • Corn futures ended the overnight session with losses of 6 to 8 cents in most contracts amid profit-taking pressure.
  • Corn traders had a sell-the-fact reaction to news Crimea voted to secede from Ukraine and join Russia. While this heightens tensions in the region, it was widely expected and therefore, lacks a bullish punch. But traders will continue to watch the situation closely.
  • Despite the uncertainty in the Black Sea region, Ukraine's corn exports are running normal, though exporters have reportedly stopped writing new contracts.
  • USDA announced a daily sale of 107,400 MMT of U.S. corn to Mexico for 2013-14, which may help limit selling interest.
  • Technically, the winter uptrends remain intact on the daily price charts. As long as that's the case, selling will be seen as corrective in nature. If uptrending support is violated, however, it would look like topping action.

 

Soybean futures are called 4 to 9 cents lower amid corrective selling.

  • Old-crop soybean futures finished 6 to 9 cents lower overnight, while new-crop contracts ended 4 to 5 cents weaker.
  • Overnight trade suggests the market will face profit-taking and bull spread unwinding this morning -- both forms of corrective trade.
  • There are concerns about slowing Chinese demand. While the bulk of Chinese cancellations so far have been South American cargoes (mostly Brazilian), traders fear Chinese buyers will wash out some U.S. purchases. Of course, with export bookings 6% above USDA's forecast, some cancellations are needed.
  • NOPA crush data for February will be out at 11 a.m. CT. The average pre-report trade guess puts February soybean crush at 140.9 million bushels.
  • USDA announced a daily sale of 110,000 MT of U.S. soybean meal to an unknown destination for 2014-15 delivery.
  • Technically, last week's low is key support for May soybean futures after the contract violated the uptrend from the late-January low.

 

Wheat futures are called 5 to 9 cents lower this morning.

  • SRW futures led losses overnight, dropping 6 to 9 cents. HRW and HRS futures posted slightly lesser declines.
  • Wheat traders had a sell-the-fact reaction to Crimea's referendum over the weekend, where the region voted to break away from Ukraine and join Russia. This heightens tension in the region, but this was widely expected.
  • So far, there has been little to no disruption to grain shipments coming from Ukraine or the Black Sea as a whole. But traders will continue to closely monitor the situation.
  • Technically, uptrending support for wheat futures remains firmly intact.

 

Live cattle futures are called steady to mildly weaker this morning. Feeder cattle are expected to open with a mixed tone.

  • Live cattle futures mildly favored the downside in light electronic trade overnight. Mild profit-taking was seen following last Friday's gains.
  • Traders come into the week with bullish cash cattle hopes after prices were steady to firmer in the Plains last week, which limits selling interest. But traders also sense a short-term top is likely near. That could limit buying interest in live cattle futures.
  • Traders will closely watch the wholesale beef market for signs of a top. Choice and Select boxed beef prices were weaker Friday and movement was light, suggesting retailers may be starting to balk at the record prices.
  • Feeder cattle futures could get a boost from weakness in the corn market, though an expected lack of buying in live cattle will likely limit the upside.

 

Lean hog futures are expected to open with a mixed tone this morning.

  • Lean hog futures were narrowly mixed in light electronic trade overnight.
  • Given strong price gains and the big premium spring- and summer-month contracts hold to the cash index, some traders may be tempted to take profits out of the market. But there aren't many active sellers, which limits the downside.
  • Concerns with porcine epidemic diarrhea virus (PEDV) remain supportive. The disease caused Smithfield Foods to halt Friday hog slaughter at its Tar Heel, North Carolina, plant. More slaughter reductions due to PEDV are expected as the number of reported cases continues to rise.
  • Cash hog bids are called steady to firmer across the Midwest to open the week. Packers are working with profitable margins and competing for tightening supplies.
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