Ahead of the Open (VIP) -- August 20, 2013

August 20, 2013 03:15 AM
 

Corn futures are called 3 to 5 cents lower on profit-taking.

  • Corn futures ended the overnight session mostly 5 cents lower on profit-taking after yesterday's gains.
  • Traders are also noting strong yield potential as revealed from the Midwest Crop Tour from Ohio and South Dakota.
  • The first day of the Midwest Crop Tour revealed a corn yield in Ohio of 171.64 bu. per acre, which compares to the three-year average of 144.12 bu. per acre.
  • The western leg of the Tour found a South Dakota corn yield of 161.75 bu. per acre, which compares to the three-year average of 119.65 bu. per acre.
  • But crop scouts note that recent dryness is a concern, as is the maturity of the South Dakota corn crop.
  • Yesterday's crop condition ratings showed the condition of the corn crop declined more than expected. Our weighted Crop Condition Index showed the crop declined by nearly 5 points from last week to 361.13 on our scale (0 to 500 being perfect).
  • Gulf corn basis is up a dime for immediate delivery to stand $1.10 over September futures to signal some fresh demand news is on the horizon.

 

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

  • Soybean futures ended the overnight session 2 to 11 cents lower, with nearbys leading losses amid profit-taking after yesterday's sharp gains.
  • Traders are also reacting to above-average pod counts from the Pro Farmer Midwest Crop Tour, although crop scouts note the need for a finishing rain and the near-term forecast is warm and dry.
  • The first day of the Midwest Crop Tour revealed Ohio soybean pod counts in a 3'x3' square of 1,283.61, which compares to the three-year average of 1,162.64.
  • South Dakota soybean pod counts in a 3'x3' square totaled 1,016.68, which compares to the three-year average of 984.62 pods.
  • Yesterday's crop condition ratings showed the soybean crop decline a little more than expected. Our weighted Crop Condition Index showed the crop declined by 3.6 points from last week to 358.6 on our scale (0 to 500 being perfect).
  • Gulf soybean basis is steady for immediate delivery to stand $1.40 over November soybean futures.

 

SRW and HRW wheat futures are called to open 2 to 5 cents lower, with HRS expected to open mixed.

  • SRW and HRW wheat futures ended the overnight session mostly 2 to 4 cents lower on profit-taking and spillover from corn futures, while HRS futures ended mixed.
  • Wheat remains in a follower's role and is likely to continue following the lead of the corn and soybean markets over the near-term.
  • Additional pressure is coming from a softening of Gulf SRW wheat basis, which declined 5 cents for immediate delivery to stand 30 cents over September futures.
  • This reminds traders of increased global competition and the fact U.S. prices remain above the global average.
  • But pressure on HRS futures is being limited by the slower-than-usual harvest pace of the spring wheat crop. As of Sunday, USDA reports 18% was harvested, which lags the five-year average pace of 38%.

 

Live cattle futures are called to open mixed as traders wait on cash market clues.

  • Live cattle futures are expected to see a mixed start as traders wait on cash cattle trade to begin.
  • With August live cattle trading in line with last week's $123 cash market, traders are hesitant to push the contract too far ahead as it must remain in line with cash.
  • But a decidedly smaller showlist across the Southern Plains (Nebraska is up from last week) gives feedlots more bargaining power, especially with packers' profit margins in the black.
  • Choice beef values started the week up 83 cents, with Select down 24 cents. Movement was lackluster to start the week at 110 loads.
  • Weakness in the corn market is expected to be supportive for feeder futures this morning.

 

Lean hog futures are called steady to lower on building pork supplies.

  • Lean hog futures saw a mixed close yesterday, but nearby futures ended steady to weaker. Followthrough pressure for nearbys is expected this morning.
  • The cash hog market is called steady to weaker amid building market-ready supplies. This gives packers little incentive to raise bids.
  • Additionally, pork cutout values slid $1.92 to start the week on light movement of 252 loads.
  • However, pressure should be limited by the sharp discount October lean hog futures still hold to the cash index, which stands at $101.77.
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