Ahead of the Open (VIP) -- August 27, 2013

August 27, 2013 03:16 AM

Corn futures are expected to favor a slightly negative tone this morning.

  • Corn futures were choppy overnight, with new-crop contracts mostly 1 cent lower in late overnight trade.
  • Following yesterday's sharp gains, traders opted to take some profits out of the market.
  • But pressure on corn is being limited by extreme heat moving across the Corn Belt. The hottest conditions of the week are expected today, with no rain in sight until next week.
  • Our weighted Crop Condition Index shows the condition of the corn crop declined by 6.5 points to 354.6 (0 to 500 point scale) and steeper declines are expected next week.
  • December corn is pivoting around the important $5.00 level this morning. Back-to-back closes above that level are needed to turn it into support.


Soybean futures are called mixed, with buying limited following yesterday's sharp gains.

  • Nearby soybean futures ended the overnight session marginally to 3 cents lower, with the rest of the market mostly 2 to 4 cents higher.
  • Traders are reevaluating positions following yesterday's sharp gains, although concerns about this week's extreme heat and dry conditions are limiting selling to profit-taking.
  • Our weighted Crop Condition Index showed the soybean crop dropped nearly 8 points last week to 350.75 (0 to 500 point scale) and more declines are expected next week as crop scouts say crop stress could increase pod abortion.
  • November soybean futures remain in a bullish technical posture, with support within yesterday's gap area and bulls' next target contract-high resistance of $14.09 3/4.


Wheat futures are expected to favor a firmer tone in mixed trade on the open.

  • Nearby wheat futures ended the overnight session firmer, with deferred futures mixed.
  • Wheat is vulnerable to spillover pressure from corn and soybean futures this morning.
  • Limiting buying are expectations that harvest-related hedge pressure will risk this week. Weather is favorable for harvest in spring wheat country, although there is more rain in the forecast for early next week.
  • Traders are also digesting yesterday's stronger-than-expected wheat inspections pace, which revealed inspections are running well ahead of what's needed to reach USDA's export forecast.
  • Still, the wheat market has a lot of work ahead of it to signal a near-term low has been posted. Technicals remain bearish.


Live cattle futures are called to open mixed as traders wait on direction from the cash market.

  • Live cattle futures are vulnerable to some profit-taking following yesterday's gains, but traders are waiting on clearer direction from the cash market.
  • The boxed beef market started the week mixed, with Choice values down 39 cents and Select up 5 cents on very light movement of 107 loads.
  • This week's market-ready supplies are up after feedlots didn't clear up showlists last week. That also puts more uncertainty on packer demand.
  • Feeder cattle futures are due for a corrective bounce after sharp gains in the corn market resulted in sharp pressure on feeder futures yesterday. Corn futures are favoring a weaker tone this morning.


Lean hog futures are called steady to lower on profit-taking and concerns about the pork market.

  • Lean hog futures are expected to see some profit-taking following yesterday's gains, especially after pork cutout values slipped $1.28 on light movement of just 298.4 loads.
  • But pressure should be limited by concerns that extreme heat across the Corn Belt will reduce weights this week and possibly marketings.
  • Packers' profit margins remain well in the black, but demand for hogs is light as they are well supplied this week.
  • As a result, the cash hog market is expected to be steady to weaker.
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