Ahead of the Open (VIP) -- March 28, 2014

March 28, 2014 03:17 AM

Corn futures are called to open mixed amid pre-weekend position squaring.

  • Corn futures ended the overnight session narrowly mixed after a lackluster session.
  • Without fresh news for the market to digest, traders' focus is on evening positions ahead of the weekend.
  • Traders are also determining their comfort level ahead of Monday's key USDA reports, as acreage and stocks data has sparked trending moves in previous years.
  • Traders look for 2014 corn acreage to come in around 92.748 million acres, which is down from year-ago.
  • Traders expect March 1 corn stocks to come in around 7.1 billion bushels.
  • Technically, futures are near the top of the month-long consolidation range, which is spurring light profit-taking this morning.


Soybean futures are called 1 to 2 cents lower in light, pre-weekend trade.

  • Soybean futures saw a fairly narrow trading range overnight as traders' focus is on evening positions.
  • Given a lack of fresh news, traders have turned their attention to next week's key USDA reports.
  • Limiting upside potential for new-crop futures is traders' expectations that prospective plantings will be around 4.5 million above year-ago at 81.075 million acres.
  • Meanwhile, pressure on nearbys is being limited by the tight old-crop stocks situation, as traders look for March 1 soybean stocks to come in at a tight 989 million bushels.
  • Bulls still hold the technical advantage, although increased price volatility at high prices raises some concern about near-term direction.


All wheat flavors are called to open 3 to 6 cents lower on profit-taking.

  • All wheat flavors ended the overnight session mostly around 5 to 7 cents lower.
  • Some rain in the forecast for HRW wheat regions resulted in some selling overnight, although drought-busting rains are not expected.
  • Moisture needs have increased as the crop is greening, but some forecasters are talking about "just in time" rains throughout the spring.
  • Traders are also focused on evening positions ahead of Monday's key reports. Traders expect winter wheat acreage to come in around 42.157 million, down from 43.090 million in 2013.
  • Spring wheat acreage is expected at 12.27 million, up from nearly 11.60 million last year.
  • March 1 wheat stocks are expected to be tighter than year-ago at 1.042 billion bushels.


Live cattle futures are called to open steady to firmer on strength in the cash market.

  • Live cattle futures are expected to build on yesterday's strength as traders recognize nearby futures are trading at a steep discount to this week's $152 to $154 cash trade.
  • The bulk of this week's trade is thought to be done around $152 in the Southern Plains, which means April live cattle ended yesterday at around a $5.50 discount to the cash market.
  • Traders are comfortable with the discount structure given ideas the beef market has hit resistance. Choice beef values slipped $2.51 yesterday and Select declined $2.10 on improved (but still not impressive) movement of 147 loads.


Lean hog futures are called to open stronger on followthrough from yesterday's limit gains.

  • Lean hog futures are expected to see followthrough from yesterday's sharp to limit gains, although there is risk of profit-taking ahead of this afternoon's Hogs & Pigs Report.
  • Traders look for the report to show All Hogs & Pigs at 94.5%, Kept for Breeding at 99.6% and Kept for Marketing at 94.0% of year-ago levels.
  • Based on the pre-report guesses, it's clear traders expect the report to reflect the porcine epidemic diarrhea virus (PEDV) outbreak, although the most significant read on the report could come via revisions to December data.
  • The cash hog market is expected to be stronger this morning as packers continue to scurry to secure supplies for Saturday's kill.
  • Meanwhile, pork cutout values slipped $1.24 yesterday on reduced movement of 255.64 loads, which has pushed some packers' profit margins into the red.
  • April lean hog futures ended yesterday at around a $3 discount to the cash index.


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