Ahead of the Open (VIP) -- March 3, 2014

March 3, 2014 02:16 AM

Grain futures were supported overnight by rising tensions between Ukraine and Russia, as both countries have increased their military presence. Grain traders are concerned the situation could slow grain movement from the Black Sea region, which, if realized, would improve demand for U.S. supplies.

Corn futures are called 6 to 12 cents higher on global trade concerns.

  • Corn futures ended the overnight session 6 to 11 cents higher through the May contract, with far-deferred futures seeing lighter gains.
  • Early gains in the wheat market provided spillover to corn futures. Escalation of tension across the Black Sea region could also boost demand for U.S. corn.
  • May corn futures hit buy stops on the move through $4.70 in overnight trade and even saw limited trade above $4.80.
  • Key this morning is whether funds view overnight price strength as a sign of more to come, as technicals have improved.
  • Also supportive this morning is news Japan purchased 211,500 MT of U.S. corn, with 47,000 MT for 2013-14 and 164,500 MT for 2014-15. Additionally, South Korea bought 140,000 MT of old-crop U.S. corn.


Soybean futures are called 7 to 15 cents higher on a variety of factors.

  • Soybean futures ended the overnight session 7 to 13 cents higher to build on last week's rally.
  • Soybeans enjoyed early spillover from surging wheat futures, and the market extended gains thanks to lingering concerns about Brazil's ability to move its crop through the channels.
  • China's Ministry of Commerce raised its forecast of the country's soybean imports for February from 5 MMT to 5.05 MMT, but expects imports to drop to 3.49 MMT in March.
  • March soybean futures came within 1 1/4 cent of the $14.40 level overnight and ended the session mid-range.
  • Key this morning will be whether funds view still-strong technicals as enough encouragement to extend their long exposure to the market.


Wheat futures at all three exchanges are called 20 to 30 cents higher on concerns in the Black Sea region.

  • All wheat flavors surged overnight on heightened concerns about conflict between Ukraine and Russia.
  • Wheat futures were the early price leader in overnight trade as it has the most to gain from a potential slowdown in trade from the Black Sea region.
  • Cold temps have once again settled into winter wheat regions, which raises concerns about winterkill. Drought across the Southern Plains is also concerning as the condition of the HRW wheat crop has dropped through the winter.
  • March SRW wheat futures gapped higher on the open and moved above the February highs to signal a near-term low may have been posted.


Live cattle futures are called to open steady to higher on surging beef values.

  • Live cattle futures are expected to find support this morning from strength in the beef market and tight supplies.
  • Choice beef values surged $3.92 on Friday to post sharp weekly gains. But movement has slowed on the recent rally, which raises concerns about demand.
  • After last week's $150 cash cattle trade in the Southern Plains, traders will be interested to see this week's showlist to get an idea of available supplies.
  • Strength in the corn market this morning could temper buying in feeder futures, although strength in live cattle should provide some spillover support.


Lean hog futures are called steady to firmer on strength in the pork market.

  • Lean hog futures are expected to see followthough buying this morning amid bullish technicals, although futures are vulnerable to profit-taking.
  • Tighter-than-expected supplies due to the spread of the porcine epidemic diarrhea virus (PEDV) continues to support futures.
  • Also supportive for the cash market this morning is Friday's $2.26 rise in pork cutout values that helped to keep packer margins in the black.
  • But also concerning is that pork values over $100-per-cwt. have slowed pork movement, as only 272.44 loads changed hands on Friday.
  • Frigid temps across the Corn Belt and snow in eastern areas is supportive for the cash hog market this morning.


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