Ahead of the Open (VIP) -- August 29, 2013

August 29, 2013 03:15 AM
 

Corn futures are called to open 1 to 2 cents lower on followthrough from overnight losses.

  • Corn futures ended the overnight session mostly 1 cent lower, with the front-month contract down 5 3/4 cents.
  • Strength in the U.S. dollar index this morning is limiting traders' willingness to rebuild long positions.
  • But with another day of hot temps and no rain in sight across the Corn Belt, selling is being limited as traders remain concerned about the filling crop.
  • This morning's drought monitor also reflected the spread of drought across the Corn Belt, as well as the introduction of "severe" drought in southwest Iowa.
  • This morning's Weekly Export Sales Report showed net sales reductions of 15,000 MT for 2012-13, but sales of 673,800 MT for 2013-14 reflect a rebuilding of demand.

 

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

  • Soybean futures ended the overnight session 4 to 8 cents lower on a combination of profit-taking and on spillover from negative outside markets.
  • But no technical chart damage has been done and the near-term forecast remains hot and dry across the Corn Belt.
  • Adding to weather concerns is yesterday's NWS 6- to 10-day forecast that expanded the area to be impacted by below-normal precip.
  • This morning's weekly export sales data showed net soybean sales reductions of 3,200 MT for 2012-13, but sales of 868,700 MT for 2013-14. Sales came within expectations, and sales for 2013-14 are off to a solid start.

 

All wheat flavors are called 2 to 3 cents lower on spillover from corn futures.

  • All wheat flavors ended the overnight session mostly 2 to 3 cents lower on spillover from neighboring markets.
  • This morning's Weekly Export Sales Report showed sales of 551,300 MT for 2013-14, which was within expectations.
  • SovEcon says exportable wheat supplies in Russia will be tight this year. While the firm raised its forecast for the crop to 51.7 MMT, it left is exportable surplus forecast at 14.5 MMT.
  • Otherwise, there's little fresh news for the market to digest, leaving wheat to largely follow price action in the corn market.
  • Strength in the U.S. dollar index also raises concerns about the competitiveness of U.S. wheat on the global market.

 

Live cattle futures are called to open mixed as traders wait on cash trade to begin.

  • Following yesterday's slight gains, live cattle futures are called mixed as traders wait on cash trade to begin.
  • Yesterday's low-range close also doesn't bode well for a stronger start in live cattle futures.
  • Packers' bids and feedlots' asking prices are several dollars apart, signaling cash trade will be delayed until tomorrow.
  • This week's boxed beef movement has generally been light, which doesn't bode well for higher cash prices, especially given this week's larger showlist. Movement did pick up to 188 loads yesterday, however.
  • Choice beef values firmed just 19 cents yesterday and Select declined $1.24.
  • A slightly weaker tone in the corn market overnight bodes well for bulls in the feeder cattle market.

 

Lean hog futures are called to open lower based on concerns about the pork market.

  • Lean hog futures are vulnerable to followthrough from yesterday's losses due to weakness in the pork cutout market.
  • Pork values declined $1.60 yesterday due to pressure on bellies and ribs. But movement picked up at 484.5 loads.
  • While packers' profit margins are well in the black, a softer tone and increasing market-ready supplies are expected to result in mostly steady cash hog bids.
  • Although some mixed tones due to variable demand are possible, as some packers are still in need of late-week supplies due to extreme heat across the Corn Belt.
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