Ahead of the Open (VIP) -- March 25, 2014

March 25, 2014 03:14 AM

Corn futures are called to open 2 to 3 cents lower on light profit-taking.

  • Corn futures saw light profit-taking in overnight trade following yesterday's strong gains.
  • Funds were aggressive buyers of corn yesterday, which brought futures back to the top of the month-long choppy consolidation range.
  • Corn saw light spillover from weakness in the wheat market overnight, with a lack of fresh news also keeping the market subdued.
  • Traders are beginning to even positions ahead of next Monday's key USDA Prospective Plantings and Grain Stocks Report. Informa Economics will release its acreage updates later this morning.
  • Meanwhile, Taiwan has passed on its tender reported yesterday for 60,000 MT of U.S. or South American corn, which raises some concern about prices slowing demand.


Soybean futures are called 1 to 3 cents higher on a late-overnight recovery.

  • Soybean futures were choppy overnight, but recovered in late trade to end the session with 1- to 2-cent gains.
  • Key this morning will be if funds return to defend long positions or if soybeans remain vulnerable to spillover from the wheat market.
  • There's little fresh news for the market to digest this morning, which could limit traders' willingness to extend long positions.
  • But the tight old-crop stocks situation remains on traders' minds. Related to this is the fact the window for U.S. exports has remained opened longer than usual as Chinese importers have canceled South American supplies in favor of U.S. supplies.


All wheat flavors are called to open 5 to 8 cents lower.

  • Following yesterday's gains, all wheat flavors ended the overnight session 4 to 6 cents lower amid profit-taking.
  • No technical chart damage has been done, however, which could attract fresh buyers during daytime trade. Traders are taking a step back to reevaluate positions after wheat has rallied sharply so far this year.
  • Traders continue to monitor the situation in Ukraine, as export sources say the grain shipment pace remains "normal." However, fears political tensions will escalate warrant some premium, traders say.
  • SovEcon has raised its 2014 Russian grain crop forecast by 2 MMT to 88 MMT, but trimmed its grain export forecast from 24.1 MMT to 22 MMT.
  • But concerns about the HRW wheat crop in the U.S. should limit selling, as yesterday's state crop reports showed conditions continue to decline.


Live cattle futures are called to open mixed in lackluster trade.

  • Live cattle futures are expected to see a choppy tone again this morning, with pressure limited by tight supplies.
  • Traders are still digesting Friday's Cattle on Feed Report that reflected tight supplies, but larger-than-expected Placements.
  • Meanwhile, Choice beef values firmed 96 cents yesterday and Select rose $2.27 on modest movement of 111 loads.
  • Strength in beef values is helping to lift packers' profit margins, which traders recognize improves demand for cash supplies which are reportedly up slightly from last week's very tight showlist.
  • Cash trade isn't expected to get underway until later in the week, which will contribute to choppy price action in futures.


Lean hog futures are called to open lower on profit-taking.

  • Lean hog futures are expected to see followthrough pressure this morning as traders' focus is on taking profits.
  • Meanwhile, the cash hog market is called steady to firmer as packers are still having difficulty securing needed supplies due to the shortage created by the porcine epidemic diarrhea virus (PEDV). However, packers have seen profit margins tighten dramatically.
  • Historically high pork cutout values are slowing movement, as just 195.5 loads of pork traded hands yesterday. Pork values softened just 19 cents yesterday.
  • Traders are also preparing for Friday's Quarterly Hogs & Pigs Report, which will keep price activity volatile.
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