Ahead of the Open (VIP) -- March 20, 2014

March 20, 2014 03:16 AM

Corn futures are called to open 1 to 3 cents lower after a weaker overnight tone.

  • Corn futures ended the overnight session mostly 2 cents lower on comments from Germany's chancellor the region wasn't going to impose strict sanctions against Russia unless the situation worsens.
  • Meanwhile, indications of still-strong export demand should limit selling, and could result in some value buying.
  • Japan's use of corn in feed rations rose to 45.7% in January compared to 42.2% the previous year due to corn prices becoming more competitive. As a result, the ministry says feed wheat imports in 2014-15 will be lower than in 2013-14.
  • USDA reports weekly corn sales of 745,800 MT for 2013-14 were above expectations and exports of 927,100 MT were up slightly from last week.


Soybean futures are called 4 to 15 cents higher on followthrough buying.

  • Soybean futures ended the overnight session 4 to 14 cents higher, with old-crop futures leading gains amid bull spreading.
  • Futures enjoyed followthrough buying overnight as bulls have reclaimed the advantage after the recent price correction. Buying accelerated on the release of the Weekly Export Sales Report.
  • Meanwhile, traders are sorting through details of reports this morning that Chinese soybean importers are working to resell cargoes of South American beans to the U.S. One new agency reports six cargoes were being "rebooked," while another states three cargoes.
  • This morning's weekly export sales data is positive for the market, as it shows sales of 202,200 MT for 2013-14 and 437,500 MT for 2014-15 -- coming in well above expectations. The report included no major sales cancellations.
  • Additionally, the report included exports topping 1.1 MMT, up 38% from last week with China the lead destination.
  • Also this morning, USDA announced China bought 120,000 MT of 2014-15 U.S. soybeans.


SRW wheat is called 3 to 6 cents lower amid profit-taking, with HRW and HRS called 1 to 2 cents lower.

  • SRW wheat ended the overnight session 4 to 8 cents weaker, with deferreds leading the decline. HRW and HRS favored a weaker tone in the final minutes of overnight trade and ended steady to 2 cents lower.
  • While traders remain on alert regarding political tensions in the Black Sea region, comments made by Germany's chancellor caused a late setback. Germany says it won't impose strict sanctions unless Russia's involvement in Ukraine escalates.
  • This morning's Weekly Export Sales Report is positive, as it showed sales of 401,800 MT for 2013-14 and 195,200 MT for 2014-15 -- topping expectations.
  • But weekly exports of 440,000 MT were down 3% from the previous week and 8% from the prior four-week average.
  • Meanwhile, Japan's ag ministry sees 2014-15 feed wheat imports at 900,000 MMT, down from 1.07 MMT in 2013-14 due to corn becoming more competitive.
  • Strategie Grains raised its 2013-14 EU wheat export forecast by 1.3 MMT to a record 25.6 MMT and its 2014-15 forecast by 700,000 MT to 22.4 MMT due to uncertainty in the Black Sea region.


Live cattle futures are called to open slightly higher on light followthrough buying.

  • Live cattle are expected to be slightly higher this morning as bulls have momentum after futures moved off their lows into yesterday's close.
  • Traders also have a positive bias toward this week's cash market, although trade will likely be delayed until Friday afternoon as both sides await Friday's Cattle on Feed Report.
  • Choice beef values slipped 71 cents yesterday and Select declined 92 cents, but movement improved to 194 loads.
  • With market-ready supplies tighter this week, feedlots are holding out for higher bids; initial bids are weaker.


Lean hog futures are called to open slightly higher amid bullish technicals.

  • Lean hog futures are called to open slightly higher, but 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.
  • There are mixed demand signals this morning, as a modest 27-cent drop in pork values yesterday spurred an impressive 400.18 loads of pork to change hands.
  • But USDA reports weekly pork exports of 5,200 MT for 2014 were a marketing-year low, which suggests prices are rationing foreign demand.
  • The cash hog market is called steady to $2 higher again today as packers continue to work to keep kill lines running as full as possible.
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