Ahead of the Open (VIP) -- August 5, 2013

August 5, 2013 03:11 AM
 

Corn futures are called to open the day session 5 to 9 cents lower.

  • Corn futures finished the overnight session 4 to 9 cents lower and near session lows. That signals bull will maintain control on the open of daytime trade.
  • Pressure continues to come from weather as rains are pushing across areas of the western Corn Belt this morning and forecasts call for below-normal temps this week.
  • In addition, the National Weather Service is calling for below-normal temps and normal to above-normal precip to persist into at least mid-month.
  • While corn futures are oversold and funds are record short, traders are showing little interest at this time in covering short positions, signaling attitudes are fully bearish.

 

Soybean futures are called to open 5 to 12 cents lower.

  • Soybean futures faded late to finish mostly 7 to 12 cents lower and in the lower end of the overnight trading range.
  • Non-threatening weather continues to weigh on the soybean market. Rains developed in Minnesota and northern Iowa overnight and are continuing this morning.
  • In addition, the mid-range forecast calls for below-normal temps and normal to above-normal rainfall to continue into at least mid-month. As a result, traders feel conditions are beneficial for crop development.
  • News China plans to auction 500,000 MT of state-owned soybean reserves on Thursday is also price-negative, though this has been rumored for more than a week and prices are expected to be above those of imported beans.

 

Wheat futures are called 2 to 4 cents lower this morning.

  • Wheat futures favored a mildly firmer tone for much of the overnight session, but faded late to finish mostly 2 to 4 cents lower.
  • Wheat futures remain susceptible to spillover pressure from the corn and soybean markets. While export demand has improved, there isn't enough consistent demand news for wheat to break away from the other markets.
  • A firmer U.S. dollar index is also mildly price-negative for wheat futures this morning.
  • Unless futures break support at the recent lows and pick off sell stops, selling interest should be relatively limited as the market is trying to put in a seasonal low.

 

Live cattle futures are called to open steady to firmer. Feeder cattle futures are also expected to be higher this morning.

  • Live cattle futures are expected to see light buying this morning as traders continue to digest the firming of cash cattle bids in the Plains late Friday.
  • After trading at $119 in Kansas and Texas earlier in the week, late cash cattle trade pushed up to $120 in the region. As a result, August live cattle are just slightly above the top end of last week's cash trade.
  • Given the late firming of cash cattle prices, traders are hopeful cash cattle trade will again come in firmer this week. But with the boxed beef market struggling to put in a low, buying interest may be limited.
  • Feeder cattle should pull support from a firm tone in live cattle and weakness in corn.

 

Lean hog futures are expected to open the week with a mixed tone.

  • Light and choppy trade is expected in lean hog futures to open the week
  • Much of traders' attention will be on cash hog trade. Cash hog bids are expected to open the week mostly steady, though mixed undertones are likely amid varied packer demand.
  • Most pork plants need hogs for late-week slaughter runs, but several western Midwest plants are closed today for a floater holiday.
  • Packers are working with profitable cutting margins amid recent strength in the pork product market. But even with the favorable margins, packers aren't expected to get too aggressive with cash bids.
     
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