Pro Farmer Senior Markets Editor
From Pro Farmer
Updated as of 7:00 a.m. CT
Report day... The biggest surprise coming from yesterday's USDA reports was how the markets responded. Traders were expecting a larger corn carryover figure, but USDA left it unchanged and soybean carryover came in tighter than expected. Wheat data was termed neutral by the market, but there is some disappointment that USDA left their Chinese wheat estimate unchanged after traders have added weather premium due to dry conditions there. Grain futures faced profit-taking pressure yesterday.
Additional pressure in the grain markets came on strength in the dollar and
weakness in the stock market and crude oil market. Concerns
about the stimulus package resulted in sharp stock market selling.
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Opening calls. These calls originate
more than three hours before the open -- use caution, things change:
Corn: 2 to 3 cents lower. Futures were mostly around 3 cents lower
overnight. Futures quickly extended early losses yesterday, but finished near
session highs, closing marginally to 1 cent lower. USDA kept corn carryover
unchanged from last month -- making no changes to their S&D table. Traders
had expected USDA to trim usage estimates again, but USDA has opted to watch
market conditions for another month before making any changes, as recent export
demand has been much improved. In addition, USDA announced a daily corn sale
of 206,000 MT to Mexico for the current marketing year.
Soybeans: 7 to 11 cents lower. Nearbys were mostly around 11 cents
lower overnight on spillover from yesterday's losses. Futures finished mostly
6 to 8 cents lower, which was mid-range for the day. Yesterday's USDA
reports were termed supportive for soybean futures, but futures turned lower
on a combination of profit-taking, as well as improved rains in the near-term
forecast in South America. USDA lowered their South American soybean estimates,
but if timely rains continue this month, traders say estimates could stabilize
or even turn slightly higher. As a result, given the forecast for rains in
areas of Argentina and southern Brazil the remainder of the week, traders
were hesitant to add more weather premium into the market.
Wheat: 6 to 7 cents lower. Futures were mostly around 6 cents lower
overnight. Futures closed mid-range after seeing sharp losses in morning trade.
Chicago wheat closed 7 to 9 cents lower. Traders viewed USDA's data as neutral,
as USDA's carryover figure of 655 million bu. was unchanged from last month.
Traders expected a slight drop in the figure from last month, but said they
aren't surprised USDA has decided to wait another month before making changes
to their usage estimates. There was some disappointment that USDA left their
Chinese wheat estimate unchanged after traders have added weather premium
due to dry conditions there. Traders say they believe USDA's China wheat crop
estimate is too high, but rains are in the near-term forecast.
Cash cattle expectations: $2 higher.
Cash sources say cash trade could get underway today, although packers haven't
been actively bidding for cattle yet. Beef values were firmer again yesterday
on decent movement of 236 loads -- but nothing impressive. Expectations are
for $2 higher cash trade.
Futures call: Mixed. Price action is expected to be choppy as traders
wait on cash trade to develop. Futures moved off session highs as sharp losses
in the stock market resulting in traders easing long positions. April live
cattle gapped higher on the open and extended gains, but filled the gap area.
As long as futures remain in the uptrend established from the late-January
low, the near-term technical picture is positive. Yesterday's higher-high
is still a positive sign as long as futures hold above uptrending support.
Cash hog expectations: Steady to
weaker. The cash hog market is called to open steady to weaker as packers
work to get and keep margins in the black after being in the red for an extended
period of time. This week's supplies are largely booked, which will limit the
possibility of firmer bids the remainder of the week.
Futures call: Mixed. Futures are called to open mixed after yesterday's
strong gains amid profit-taking as traders reevaluate positions. April lean
hogs gapped above downtrending resistance drawn off January reaction highs.
Consecutive closes above this downtrend would signal a potential near-term
low being posted. Futures finished mid-range, which suggests the possibility
for choppy trade this morning.