Ahead of the Open (VIP) -- March 26, 2014

March 26, 2014 03:18 AM
 

Corn futures are called to open 2 to 3 cents lower amid lackluster trade.

  • Corn futures ended the overnight session mostly 2 cents lower and within the recent consolidation range amid lackluster trade.
  • Without fresh news for the market to digest, traders have turned their focus to evening positions ahead of next week's key USDA reports.
  • According to pre-report expectations, traders look for USDA's March 1 corn acreage to be up from its estimate released at the Outlook Forum, with the average guess at 92.748 million acres. But that represents around a 2.6-million-acre reduction from 2013.
  • The Grain Stocks Report has been the major market-mover in the past. Traders look for stocks of around 7.099 billion bu., up from 5.4 billion bu. a year ago.
  • China's biosafety committee is expected to meet next week and could bring up the MIR 162 trait for approval. If China continues to delay the approval, the next chance is at the committee's June meeting.

 

Soybean futures are called 1 to 5 cents lower amid bull spread unwinding.

  • Soybean futures ended the overnight session 3 to 5 cents lower in the nearbys, with new-crop futures down mostly a penny.
  • Given the lack of fresh news, traders' focus has turned to evening positions ahead of Monday's trend-setting reports.
  • According to pre-report trade guesses, traders look for March 1 acreage of 81.075 million, which would be up from USDA's Outlook Forum estimate, and up around 4.5 million acres from 2013.
  • Traders will also have a Quarterly Grain Stocks Report next Monday, which traders expect to reveal a tightening supply situation due to strong demand. The average trade guess is around 989 million bu., below the year-ago tally of 998 million bushels.

 

All wheat flavors are called to open 3 to 5 cents lower amid light profit-taking.

  • SRW and HRW wheat futures ended the overnight session 4 to 5 cents lower, with HRS down 2 to 4 cents.
  • Traders' focus has turned to evening positions ahead of Monday's key Prospective Planting and Grain Stocks Reports.
  • According to pre-report expectations, traders look for spring wheat acreage of around 12.27 million, which represents a 674,000-acre increase from 2013. All wheat acreage of around 56.277 million is expected, which compares to 56.156 million in 2013.
  • Traders expect the Grain Stocks Report to reveal March 1 wheat stocks of around 1.042 billion bu., down from 1.235 billion bu. a year-ago.
  • Meanwhile, export news is light. Japan has modestly increased its forecast for 2014-15 wheat for food imports to 4.93 MMT.

 

Live cattle futures are called to open higher in reaction to cash trade.

  • Live cattle futures are expected to see followthrough from yesterday's late-session climb on news of higher cash cattle trade.
  • Traders were surprised by reports of light cash trade beginning in the Southern Plains yesterday at $150, which was steady with the previous week. But cash trade picked up at $152 in the afternoon and packers paid $154 for cattle in Nebraska.
  • April live cattle ended yesterday at more than a $6 discount to the cash market, which gives bulls more leeway to start the day.
  • But traders are comfortable with the discount structure to the cash market as they believe there's little more upside potential for the cash market.
  • Choice beef values firmed 13 cents yesterday and Select declined $1.48 on light movement of 108 loads, which raises concerns about demand.
  • A weaker tone in the corn market and gains in live cattle should support feeder futures this morning.

 

Lean hog futures are called to open lower on followthrough pressure.

  • Lean hog futures are called to open lower on followthrough from yesterday's limit losses.
  • Momentum has shifted to the bears, as the parabolic uptrend has been broken.
  • Traders are also lightening their long exposure to the market ahead of Friday's Quarterly Hogs & Pigs Report.
  • The report is expected to show All Hogs & Pigs at 94.5%, Kept for Breeding at 99.6% and Kept for Marketing at 94% of year-ago levels. The drawdown in supplies is due to the porcine epidemic diarrhea virus (PEDV) outbreak.
  • Pre-report expectations for the weight breakdowns suggests traders have factored in between a 5% and 7% drop in supplies through early fall.
  • Meanwhile, pork cutout values firmed 6 cents yesterday on movement of 397.1 loads, which reflects a pickup in demand.
  • Due to tight market-ready supplies, the cash market is expected to be steady to firmer again today.
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