Traders See Carryover Tightening

April 7, 2009 07:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Traders look for tighter carryover... Last week's Prospective Plantings Report turned more attention to the
spring weather pattern. As traders continue to factor in acreage expectations, USDA will provide them with a fresh look at the supply & demand situation on Thursday morning at 7:30 CT. Heading into the report traders look for corn, soybean and wheat carryover to be down slightly from last month. Following are pre-report expectations.

2008-09 carryover

Avg.

Range

USDA March

2007/08

in billion bushels

Corn

1.731

1.675-1.954

1.740

1.624

Soybeans

0.169

0.101-0.185

0.185

0.205

Wheat

0.697

0.666-0.727

0.712

0.306

Make sure you check "Leading Edge Reports" following the Thursday morning report for full details and analysis.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 4 to 6 cents lower. Futures were weaker overnight amid sharp losses in the crude oil market overnight. Futures extended losses into the close to finish around 9 cents lower yesterday. Outside markets remained negative through the day and resulted in losses being extended. May corn penetrated resistance of $4.00, but couldn't close above it after closing above that level the three previous sessions.

Soybeans: Mixed. Futures were mixed overnight, with old-crop firmer and new-crop weaker. Futures finished mostly 4 to 6 cents lower yesterday, which was near session lows. Soybean turned solidly higher in mid-morning trade, but were unable to hold price strength amid price-negative trade in outside markets. The technical picture for May soybean futures has improved as the contact has pushed through the downtrend from the winter highs and is showing a "U" bottom on the daily chart.

Wheat: 4 to 5 cents lower. Futures were weaker overnight on spillover from corn weakness. Futures succumbed to pressure from outside markets yesterday, posting double-digit losses for the day. Kansas City futures traded slightly higher yesterday morning after sub-freezing temps in the Plains again overnight. But the realization it will likely take several weeks before any damage is known, this failed to produce sustained support.


Cash cattle expectations: Watching beef market. Choice beef values rose 64 cents and Select was up 68 cents yesterday on solid movement of 262 loads. If the beef market remains strong today, it would raise cash expectations $1 to $2 from last week's $85 trade. No active bidding has been reported yet, with cash trade not expected until Thursday afternoon.

Futures call: Mixed. Futures were choppy yesterday, with more of the same likely today as traders wait on cash signals. June live cattle posted an inside day of trade on the charts, but closed just off the session lows, which gives bears momentum heading into this morning's open.

Cash hog expectations: Steady to weaker. Most packers have this week's needs covered and have turned
their attention to improving negative margins. Pork cutout values were $1.39 higher yesterday after posting sharp losses to start the week. But unless pork prices continue to surge, demand for cash hogs will remain light into early next week as most plants are closed Friday, next Monday or both for Easter.

Futures call: Mixed. Futures are called mixed amid spreading following yesterday's choppy session. The big premium summer-month contracts holds to the cash market is about to come into greater focus as the April contract nears expiration. As a result, additional near-term strength may be hard to come by unless the cash market shows seasonal strength.


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