Ahead of the Open (VIP) -- March 7, 2014

March 7, 2014 02:13 AM

Corn futures are called steady to 5 cents higher, with nearbys leading gains.

  • Corn futures ended the overnight session steady to 4 cents higher on spillover from double-digit gains in the bean pit.
  • Nearby corn is leading gains amid bull spreading and indications demand remains strong.
  • Traders still have yesterday's weekly export sales data on their minds, as it confirms higher prices have not slowed demand.
  • Gulf corn basis is 1 cent firmer for immediate delivery this morning, which is also a positive demand signal.
  • Corn futures are also benefiting from technical buying, with the May contract seeing limited trade above the key $5.00 level in overnight trade. Futures are working on strong weekly gains.
  • Traders will also begin to more actively even positions ahead of Monday's USDA Supply & Demand Report, which is expected to show old-crop corn carryover up slightly from last month.


Soybean futures are called 10 to 20 cents higher on followthrough from overnight strength.

  • Soybean futures ended the overnight session 8 to 18 cents higher, with nearbys leading gains amid bull spreading and continued solid demand.
  • Traders expect Monday's USDA Supply & Demand Report to show a drawdown of old-crop soybean stocks due to continued strong export demand.
  • While China has reported small sales cancellations, a much larger tally was expected by now. But shipping delays in Brazil are keeping the U.S. export window open longer than usual.
  • Yesterday's weekly export sales data is still on traders' minds, as it showed China is still taking shipment of U.S. soybeans.
  • Soybean futures are working on sharp weekly gains, with the May contract coming within 1/4-cent of the $14.60 level in overnight trade.
  • November beans are just pennies below the key $12.00 level.


Wheat futures are called 8 to 15 cents higher on concerns about the Black Sea region.

  • SRW wheat ended the overnight session 10 to 13 cents higher, with HRW up 8 to 10 cents and HRS up 9 to 10 cents.
  • The ongoing dispute between Ukraine and Russia has traders expecting demand for U.S. wheat to improve. While the region is open for business, export sources say recent bookings of wheat from the Black Sea region have declined.
  • According to floor sources, traders don't want to be caught short heading into the weekend given political tensions.
  • A stronger U.S. dollar index due to better-than-expected jobs growth in February is being put on the backburner for now.
  • Traders will also begin to more actively even positions ahead of Monday's USDA S&D Report, which is expected to show an uptick in carryover from last month.


Live cattle futures are called to open steady to slightly lower on profit-taking.

  • Live cattle futures are expected to see followthrough from yesterday's losses, but pressure should be limited by the discount nearbys hold to this week's cash trade.
  • Cash trade is thought to be complete for the week at $148 in the Southern Plains, which is down $2 from the previous week.
  • Despite smaller showlists and strength in the beef market, packers were not willing to raise bids due to negative profit margins.
  • Traders believe this could be the sign a major high has been posted. A low-range close today would also be a technical clue a high has been posted as prices have deteriorated since the April contract posted a key bearish reversal on Wednesday.
  • Feeder futures are taking their lead from live cattle futures, with firmer corn futures also likely to add to a weaker tone.


Lean hog futures are called to open firmer amid PEDV concerns.

  • Lean hog futures are expected to see followhrough from yesterday's gains, with April leading the way amid concerns about tighter-than-expected supplies.
  • The National Animal Health Laboratory Network reports a total of 252 new cases of PEDV were confirmed in the last reporting period, bringing the grain total to 4,106. While down from the previous week's high, the tally continues to grow.
  • Pork cutout values improved $1.75 yesterday, but movement slowed to 257.8 loads to signal high prices are slowing demand.
  • The cash hog market is expected to be stronger again today as packers have difficulty securing this week's supplies.
  • Lean hog futures are severely overbought according to the Relative Strength Index but the technical situation remains bullish. April hogs are trading at a steep premium to the cash index.
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