Ahead of the Open (VIP) -- March 21, 2014

March 21, 2014 03:16 AM

Corn futures are called to open 1 to 2 cents lower on spillover from neighboring markets.

  • Corn futures were quiet overnight, ending the session mostly around a penny lower.
  • Much of the pressure overnight came on spillover from double-digit losses in soybean futures and weakness in wheat futures.
  • As a result, key this morning will be if traders view overnight losses in neighboring pits as overdone or if the selling continues.
  • There are concerns about domestic feed demand due to the PEDV outbreak and tightening cattle feedlot situation.
  • But traders note that exports and ethanol production have improved from last year, which is limiting selling.
  • As a result, corn has been locked in a choppy two-week trading range. Most contracts are currently closer to support levels.
  • Also this morning, USDA announced Egypt, which is known as a value buyer, has purchased 340,000 MT of U.S. old-crop corn. This could help to firm the market this morning.


Soybean futures are called 5 to 20 cents lower amid profit-taking, with nearbys leading losses.

  • Old-crop soybean futures ended the overnight session 16 to 18 cents lower, with September down a dime and new-crop futures mostly 8 to 10 cents lower amid profit-taking.
  • Price action has been increasingly volatile, which can be a sign of topping. Pressure is being limited to profit-taking so far this morning for old-crop futures, as traders recognize the tight stocks situation.
  • According to a top official at Shinograin Oils Corporation, China's 2013-14 soybean imports are expected to be up 13% from the previous year. Traders say this is factored into prices, although "where" those supplies come from is key as the U.S. export window has remained open longer than usual.
  • May soybean futures are still working on strong weekly gains and bulls say a week close above $14.00 would be a sign of strength.


Wheat futures are called 5 to 7 cents lower on profit-taking.

  • All wheat flavors ended the overnight session mostly 5 to 7 cents lower on light followthrough from yesterday's losses.
  • But no technical chart damage has yet been done and wheat futures are still working on solid weekly gains.
  • Wheat has moved into a follower's role after taking on the leadership role for the last couple of weeks.
  • But all eyes remain on the situation in Ukraine as traders sort through details and recognize some premium is warranted.
  • Also supportive are concerns about the HRW wheat crop, as little is in the forecast in terms of rains for the Central and Southern U.S. Plains the next seven to 10 days.
  • Gulf HRW wheat basis is up 5 cents for immediate delivery, while SRW basis is steady this morning.


Live cattle futures are called to open steady to firmer amid pre-report positioning.

  • Live cattle futures are called steady to firmer as traders even positions ahead of this afternoon's Cattle on Feed Report. Some view yesterday's losses as overdone.
  • The report will remind the market of the tight supply situation, as On Feed is expected at 98.9% and Marketings are expected at 97.0% of year-ago levels.
  • Meanwhile, due to drought in the Southern Plains and high cash prices, Placements are expected to come in around 109.7% of year-ago.
  • Traders brushed off $150 cash cattle trade yesterday in the Southern Plains, which is up $2 from last week. But April futures ended yesterday at more than a $5 discount to the cash market, which is expected to bolster futures this morning.
  • Price action to close out the week could be telling of near-term price direction after futures posted key bearish reversals yesterday. Earlier in the month, similar technical price action was followed by a period of price stability and then the latest rally.
  • Weakness in the corn market this morning is supportive for feeder futures.


Lean hog futures are called to open mixed as traders even positions ahead of the weekend.

  • Lean hog futures are vulnerable to profit-taking heading into the weekend, but ongoing concerns about the porcine epidemic diarrhea virus (PEDV) and continued strength in the cash market should limit pressure to corrective trade.
  • The National Animal Health Laboratory Network says 296 new cases of PEDV were confirmed the week ended March 9. While down from the previous week, it still represents an elevated amount.
  • Meanwhile, pork cutout values firmed 93 cents yesterday to rise above $130 per cwt. Movement slowed to 280.09 loads.
  • Packers' profit margins remain in the black, which is encouraging them to keep kill lines running as full as possible amid tighter-than-expected marketings.
  • While the cash market has surged this week, April lean hog futures still hold more than a $6 premium to the cash index, which raises the risk of profit-taking at any time.
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