Ahead of the Open (VIP) -- August 6, 2013

August 6, 2013 03:03 AM

Corn futures are expected to be narrowly mixed this morning amid bull spreading.

  • Corn futures finished the overnight session mixed, with new-crop futures marginally to 1 cent lower. September corn futures ended 3 cents firmer amid bull spreading.
  • New-crop futures ended the overnight session off its low, but buying was limited to corrective trade given the perception ideal weather is boosting yield potential.
  • Our weighted Crop Condition Index shows the corn crop improved by 2.7 points from last week to 367.3 (0 to 500 being perfect). If rains materialize as expected across the Corn Belt, traders will look for further improvement in next week's condition report.
  • The NWS forecast for Aug. 11-15 calls for below-normal temps and normal to above-normal precip across the Corn Belt.
  • Gulf corn basis is steady this morning for immediately delivery to stand 95 cents above September futures.


Soybean futures are called to open mixed, although new-crop futures are expected 3 to 6 cents lower.

  • August beans ended the overnight session marginally higher, with new-crop futures 3 to 6 cents lower.
  • Traders view weather during the critical pod-filling month of August as nearly ideal, as there's more rain in the near-term forecast and temps are expected to remain non-threatening.
  • According to our weighted Crop Condition Index, the soybean crop improved by 2 points from last week to 362.87 (0 to 500 being perfect). Gains in Illinois and Indiana more than offset the slight decline to Iowa's crop.
  • November soybean futures have posted back-to-back closes below the April low of $11.86 1/2. This makes bears' next target the June low of $11.40.
  • Also this morning, USDA announced a 110,000-MT soybean sale to China for 2013-14.
  • Gulf soybean basis is steady for immediate delivery to stand $1.70 over November futures, but has softened by 5 cents for early September delivery.


Wheat futures are expected to favor a firmer tone on short-covering.

  • SRW wheat ended the overnight session mostly 2 cents higher, with HRW and HRS ending narrowly mixed amid bull spreading.
  • Upside potential will be limited to short-covering on perception of a global crop recovery.
  • Futures are also due for a short-covering bounce following yesterday's sharp decline.
  • Our weighted Crop Condition Index shows the spring wheat crop declined by nearly 3 points from last week to stand at 368.10 (0 to 500 being perfect).
  • Traders are waiting on results from an Egyptian wheat tender.
  • Gulf SRW wheat basis has softened by a penny for immediate delivery to stand 57 cents over September futures.


Live cattle futures are called to open mixed as traders gauge cash signals.

  • Live cattle futures are expected to see another choppy day of price action, as traders wait on clues from the cash market.
  • This week's cattle showlist is nearly steady with last week. As a result, traders are taking their cash clues from the boxed beef market.
  • Beef prices were softer yesterday and very light movement, which keeps demand concerns on traders' minds.
  • But with packers' profit margins in the black and cash trade firming late last week, traders are hopeful for at least steady cash trade this week.
  • Meanwhile, feeder futures are vulnerable to profit-taking to narrow the premium nearbys hold to the cash index. But pressure on feeder futures should be limited by tightening calf supplies.


Lean hog futures are called slightly lower on profit-taking.

  • Following yesterday's sharp gains in nearby contracts, lean hog futures are expected to see light profit-taking pressure.
  • August lean hog futures rallied yesterday to return in line with the cash index. October hogs, which will soon be the lead-month contract, are trading at around a $15 discount to the index.
  • Meanwhile, the cash hog market is expected to be mostly steady today amid variable demand as packers are having no difficulty securing this week's needs.
  • Traders will continue to keep a close eye on the pork cutout market after values firmed 56 cents yesterday, but demand was light.
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