Ahead of the Open (VIP) -- August 14, 2013

August 14, 2013 03:14 AM
 

Corn futures are called steady to 2 cents higher on short-covering.

  • Corn futures ended the overnight session steady to around a penny higher on short-covering following yesterday's gains.
  • But the technical makeup of the corn market remains in the hands of the bears, especially after yesterday's losses negated the previous day's bullish reversal.
  • The weather is getting some attention, but buying on concerns about building dryness across the western Corn Belt is being limited by expectations for a still-large corn crop.
  • Gulf corn basis is 1 cent firmer for immediate delivery to stand 94 cents above September futures, which reflects tight old-crop supplies.

 

Soybean futures are called 5 to 10 cents lower amid profit-taking.

  • Soybean futures ended the overnight session 4 to 8 cents lower on profit-taking.
  • Spread unwinding with corn is also leading to some profit-taking in the bean market this morning.
  • Traders, however, are keeping a close eye on the weather, as the forecast for below-normal precip across the Corn Belt well into next week raises concerns about filling beans, especially in the established drought area of the western Belt.
  • Also this morning, USDA announced China has purchased 110,000 MT of soybeans for the upcoming marketing year.
  • Gulf soybean basis is steady this morning for immediate delivery to stand $1.50 over November futures, reflecting tight supplies.

 

Wheat futures are called steady to 2 cents lower on a lack of fresh demand news.

  • All wheat flavors ended the overnight session marginally to 4 cents lower, which leads to expectations for a softer start to daytime trade.
  • A lack of fresh demand news is also limiting buying to short-covering, as well as a pickup in spring wheat harvest.
  • Meanwhile, Russia's ag ministry has trimmed the country's grain crop estimate to say it will now exceed 90 MMT, which is down from a range of 90 MMT to 94 MMT. But traders still recognize this represents a recovery from last year's sharply reduced crop of 71 MMT.
  • Gulf SRW wheat basis is steady for immediate delivery and down 5 cents for early September delivery to reflect increased global competition.

 

Live cattle futures are called to open slightly higher this morning on bullish cash expectations.

  • Live cattle futures are expected to see followthrough buying after yesterday's stronger close as bullish momentum is gradually building.
  • Given tighter market-ready supplies, expectations are for $1 to $2 higher cash cattle trade, although packers have not yet begun actively bidding for supplies.
  • Choice beef values were 4 cents firmer yesterday and Select rose 45 cents on slow movement of 115 loads.
  • Tight calf supplies are expected to give feeder futures a lift this morning, although buying could be limited by the premium futures hold to the cash market.

 

Lean hog futures are expected to be steady to firmer this morning on solid demand for hogs.

  • Lean hog futures are expected to enjoy spillover from live cattle as well as from strong demand for cash hogs.
  • Packers have seen profit margins tighten this week, although they remain in the black to maintain a steady-to-firmer tone in the cash hog market.
  • Pork cutout values firmed 38 cents yesterday on decent-but-not-impressive movement of 382.7 loads.
  • August lean hog futures will expire at noon CT today. October will soon be the lead month contract and it holds a sharp discount to the cash index.
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