Ahead of the Open (VIP) -- March 24, 2014

March 24, 2014 03:16 AM

Corn futures are called to open 1 to 3 cents higher on spillover from neighboring pits.

  • Corn futures favored a firmer tone throughout the overnight session, but ended off the highs with gains of 2 to 3 cents.
  • Heightened tensions in the Black Sea region supported corn futures overnight, as Russia is showing no signs of backing down. Traders believe this will ultimately strengthen demand for U.S. corn.
  • News that China has rejected a 21,800-MT of U.S. corn because it contained the unapproved MIR 162 strain (Syngenta's Viptera) was easily absorbed by the market as the situation is well known about.
  • Meanwhile, Taiwan has issued a tender to purchase up to 60,000 MT of corn sourced from the U.S. or South America.


Soybean futures are called 1 to 8 cents higher amid bull spreading.

  • Soybean futures were highly volatile overnight, with double-digit losses in early trade eventually giving way to a firmer tone on spillover from wheat. Soybean futures ended the overnight session marginally to 2 cents higher in most contracts, with the front-months posting gains of 6 to 8 cents.
  • Adding to price volatility overnight was disappointing data from China, as its flash purchasing managers' index (PMI) for March dropped to 48.1, raising concerns about economic growth.
  • The PMI data brought China's demand concerns back into focus, as poor crushing margins and bird-flu put the country's near-term soybean demand into question.
  • But the tightened old-crop stocks situation has traders' focused on bull spreads.


All wheat flavors are called to open 5 to 8 cents higher amid political tensions in the Black Sea region.

  • Wheat futures favored a weaker tone to start the overnight session amid profit-taking, with eventually gave way to value buying.
  • Wheat futures are being supported by rising political tensions in the Black Sea region, as Russia overtook another Ukrainian military base in Crimea over the weekend and remains along its border with Ukraine.
  • Meanwhile, Russia says it exported 19.786 MMT of grain from July 1 through March 19, a 40.8% increase over year-ago. Its ag ministry forecasts 2013-14 grain exports at 22 MMT, which, if realized, would be up from 15.69 MMT the previous season.
  • Futures are also being supported by dry conditions in the Central and Southern Plains as the HRW wheat crop has exited dormancy in worse shape than year-ago.


Live cattle futures are called to open steady to weaker in reaction to Friday's Cattle on Feed Report.

  • Live cattle are called steady to weaker in reaction to Friday's Cattle on Feed Report that showed Placements well above expectations.
  • While On Feed and Marketings were in line with expectations, Placements at 115% of year-ago levels signals supplies for the third quarter will be larger than previously indicated.
  • But USDA's Cold Storage Report, also released Friday, could bring some support to nearby futures as it showed total frozen beef stocks at the end of February were down 17% from year-ago levels and 5% tighter than the previous month.
  • Boxed beef prices softened $1.41 on Friday and Select declined $1.11 on light movement of 104 loads.
  • Traders will be keeping an eye on the beef market for signs a top has been posted.


Lean hog futures are called to open steady to weaker amid demand concerns.

  • Lean hog futures are called to open steady to weaker amid profit-taking and concerns about demand.
  • Friday's Cold Storage Report showed total frozen pork stocks at the end February up 6% from the previous month and 3% higher than year-ago levels.
  • Pork cutout values firmed 37 cents on Friday, but movement was a light 219.66 loads to signal near-record prices are slowing demand.
  • But with packers' profit margins in the black and market-ready supplies tighter than expected, packers are willing to raise bids to keep kill lines running as full as possible.
  • Futures are vulnerable to profit-taking given the overbought condition of the market and the sharp premium nearbys hold to the cash index.
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