Ahead of the Open (VIP) -- March 19, 2014

March 19, 2014 03:12 AM

Corn futures are called mixed after a choppy overnight session.

  • Corn futures ended the overnight session marginally to around a penny lower, but the market was mixed over the course of the session.
  • Buying was limited by a lack of fresh news and weakness in SRW wheat futures. But losses overnight were limited by sharp gains in nearby soybean futures.
  • Pressure is also being limited by concerns about political tensions rising in the Black Sea region, as this could attract some fresh business to the U.S.
  • But news that Taiwan has rejected all offers made on its tender to purchase 60,000 MT of corn raises concern that prices are tempering demand.


Old-crop soybeans are called 10 to 15 cents higher, with new-crop up 3 to 5 cents.

  • Old-crop beans posted double-digit gains in overnight trade amid bull spreading, with new-crop posting lighter gains.
  • May beans briefly traded above $14.40 in overnight trade. November beans saw trade above $11.90.
  • Traders remain concerned about tight old-crop supplies and shipping delays in South America.
  • Traders are also digesting rumors about U.S. imports of South American beans, although some export sources say this is to be expected.
  • Traders still have Monday's better-than-expected NOPA crush data on their minds, which signals domestic demand is not being slows as much as feared by rising prices.


SRW and HRW futures are expected to be weaker this morning, with HRS called firmer.

  • SRW futures ended the overnight session 3 to mostly 4 cents lower, with HRW down 2 cents. HRS futures ended the overnight session marginally to 2 cents higher.
  • SRW and HRW futures saw light profit-taking following yesterday's sharp gains, while HRS enjoyed light followthrough buying.
  • Futures were supported yesterday by ongoing tensions in Ukraine, as there are no signals that Russia is going to leave Crimea anytime soon.
  • Heightened tensions in the Black Sea region raise concerns that shipping from this major export hub will be disrupted, causing traders to add fear premium into wheat futures.
  • Adding to the support in the wheat pit are concerns about drought in the Southern Plains, as winter wheat conditions declined again last week.


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

  • Live cattle are expected to see a choppy start after a mixed day of trade Tuesday. Nearbys remain at a discount to last week's cash trade.
  • Traders are waiting on clearer direction from the cash market and remain cautious about extending long positions due to concerns about historically strong beef prices.
  • Choice beef values rose another $1.21 yesterday and Select rose $1.13 on light but improved movement of 100 loads.
  • But given tight market-ready supplies, feedlots are demanding more for this week's supplies. Asking prices are around $151 and starting bids are expected between $146 and $147 in the Southern Plains.
  • Bulls clearly hold the technical advantage, but live cattle futures have not been able to keep up with the blistering pace of gains in the hog pit.


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

  • Lean hog futures are called higher based on strength in the pork market and strong demand for cash supplies.
  • Pork cutout values surged $3.55 yesterday to a record $129.57 per cwt.; movement improved to 281.65 loads, but recent light movement suggests prices and risen too far too fast.
  • Some packers have trimmed hours to adjust to tighter market-ready supplies caused by the outbreak of the porcine epidemic diarrhea virus (PEDV), but cash bids have continued to rise as packers' margins have remained in the black.
  • The cash hog market is called steady to mostly $1 higher again today, with some eastern locations expected to raise bids by $2 due to tighter supplies.
  • Technicals are clearly bullish, but futures are at risk of profit-taking at any time given the severely overbought condition of the market and the large premium nearbys hold to the cash index.
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