Ahead of the Open (VIP) -- March 5, 2014

March 5, 2014 02:02 AM
 

Corn futures are called 1 to 3 cents lower as traders reevaluate positions.

  • Corn futures ended the overnight session mostly 2 to 3 cents lower amid light profit-taking.
  • News that China may approve Viptera corn (MIR 162) the first half of the year is mildly supportive.
  • Otherwise, there's little fresh news for the market to digest this morning as traders are waiting on fresh demand news to determine if the recent price rise has slowed demand.
  • Yesterday's close above the $4.80 level in May corn has the attention of chart watchers this morning as technicals have improved. The contract remained above that level in overnight trade.
  • Therefore, key will be if funds continue to extend their long exposure to the market this week.

 

Soybean futures are called mixed after a lackluster overnight session.

  • Soybean futures ended the overnight session mostly marginally to 1 cent lower, but were mixed in late trade.
  • Helping to limit pressure overnight were concerns about the top end of yield potential being taken off the Brazilian bean crop as some private forecasters have lowered their estimates of the crop.
  • USDA announced that China cancelled 245,00 MT of old-crop U.S. soybean sales. While not a large tally overall, traders suspect more will be coming as China turns its focus to new-crop Brazilian supplies.
  • The Chinese Premier, in outlining the economic forecast, said the country aims for economic growth of 7.5%, which is the same as last year.
  • Old-crop soybean futures remain in their steep uptrend, which has turned the $14.00 into support for the May contract.

 

Wheat futures are called mixed, with SRW expected steady to 1 cent lower.

  • SRW wheat ended the overnight session marginally to 1 cent lower, with HRW and HRS finishing mixed.
  • SRW wheat softened a bit on spillover from late weakness in the corn market.
  • Traders continue to keep a close eye on developments between Ukraine and Russia as they remain concerned the conflict could slow grain movement from the Black Sea region.
  • Improved moisture chances for the HRW Wheat Belt are also limiting gains, although this week's precip won't be heavy enough to cure the long-lasting drought.
  • Key this morning if whether funds continue to rebuild a long position as technicals have greatly improved and the market is not yet overbought.

 

Live cattle futures are called to open mixed as traders wait on cash trade signals.

  • Live cattle futures were quiet in electronic trade, which raises expectations for a mixed start to the day.
  • Traders are waiting on clearer direction from the cash market, as bids and asking prices are several dollars apart, signaling trade will be delayed until Friday.
  • Feedlots are digging in their heels given this week's tighter showlist and stress of animals caused by wintery weather.
  • Strength in the boxed beef market also has feedlots demanding higher prices, as Choice values rose another $2.64 yesterday, although product movement has slowed.
  • Nearby live cattle are trading at a discount to last week's cash market, which signals traders don't expect cash strength to be lasting.
  • Live cattle could also benefit from spillover from lean hog futures, which were sharply higher overnight.

 

Lean hog futures are called to open moderately to sharply higher on followthrough buying.

  • Lean hog futures are expected to see followthrough from yesterday's sharp to limit-up performance given positive technicals and fundamentals.
  • June lean hog futures gapped higher and rose above $118.00 in electronic trade to steepen the uptrend.
  • While lean hog futures are severely overbought and due for a correction, for now, there seems to be no interest in profit-taking.
  • Traders are reacting to heightened concerns about the porcine epidemic diarrhea virus (PEDV) as this week's slaughter supplies are below expectations and the virus continues to spread.
  • Pork cutout values improved $1.54 to $106.71 per cwt. yesterday on solid movement of 365.99 loads.
  • Strength in the product market and tightening supplies has forced packers to raise bids again this week.
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