Ahead of the Open (VIP) -- August 2, 2013

August 2, 2013 03:19 AM
 

Corn futures are called 1 to 3 cents lower as bearish momentum builds.

  • Corn futures closed out the overnight session 1 to 2 cents lower on followthrough from yesterday's losses.
  • Bears continue to hold the advantage due to forecasts for non-threatening weather into at least mid-August. Cooler-than-usual temps and waves of showers are expected across the Corn Belt this weekend.
  • FC Stone pegs the U.S. corn crop at 13.993 billion bu., with a yield of 157 bu. per acre ahead of USDA's first survey-based crop estimate on Aug. 12.
  • Meanwhile, the U.S. dollar index has softened sharply on disappointing employment data. The Labor Department reports 162,000 non-farm payrolls were added in July, which came in below expectations, and previous jobs data was downwardly revised.

 

Soybean futures are called to open 2 to 5 cents higher on short-covering.

  • Soybean futures favored a firmer tone and ended the overnight session 1 to 6 cents higher.
  • Futures are expected to be supported by short-covering as traders even positions ahead of the weekend.
  • But buying will be limited due to favorable weather forecasts. Mild temps and waves of showers are expected across the Corn Belt this weekend. And the forecast calls for below-normal temps and normal to above-normal rainfall through mid-August.
  • FC Stone pegs the U.S. soybean crop at 3.309 billion bu., with a yield of 43 bu. per acre ahead of USDA's first survey-based crop estimate on Aug. 12.
  • Weakness in the dollar index is also supportive of commodity buying this morning after the Labor Department reported the economy added fewer jobs than expected in July.

 

Wheat futures are called mixed with an upside bias as traders work to even positions ahead of the weekend.

  • SRW futures ended the overnight session mostly 1 cent lower to 1 cent higher, with HRW mostly 1 to 2 cents higher and HRS futures mostly 1 to 3 cents higher.
  • Traders may even positions ahead of the weekend. But buying will be limited by bearish momentum in the corn market.
  • Meanwhile, the U.S. dollar index is under pressure this morning, which is also supportive of short-covering efforts in the wheat market. Investors are reacting to a lower-than-expected jobs figure.
  • While Black Sea origin wheat is priced under U.S. wheat, the recent pickup in demand for U.S. wheat is helping wheat futures to build a base of support.

 

Live cattle futures are called to open steady to weaker on news of steady cash cattle trade.

  • Live cattle futures are expected to see light pressure this morning in reaction to news that cash cattle trade has begun in the Southern Plains at $119, which is steady with week-ago.
  • August live cattle ended yesterday at $1.80 premium to the cash market, which raises the risk of profit-taking ahead of the weekend.
  • But tightening market-ready supplies should help to limit downside risk for futures.
  • Choice boxed beef values firmed 34 cents yesterday and Select softened by 12 cents. Movement remained light at 175 loads.
  • The CME feeder index has continued to improve this week and August feeder futures are trading at around a $5 premium to the index.

 

Lean hog futures are called to open mixed amid bull spreading.

  • Nearby lean hog futures are expected to build on yesterday's gains due to strength in the pork product market, while deferred futures are called steady to weaker due to expectations for building supplies.
  • The pork cutout value firmed $1.59 yesterday and movement was solid at 341.8 loads, which helped to keep packers' profit margins in the black.
  • The cash market is expected to finish the week steady to firmer amid variable demand. Some locations are still in need of additional supplies for tomorrow's kill, while other are working to secure next week's needs.
  • August lean hog futures ended yesterday at around a $2 discount to the cash index, which is also supportive for nearby futures this morning.
     
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