Ahead of the Open (VIP) -- August 8, 2013

August 8, 2013 03:14 AM
 

Corn futures are called to open 2 to 5 cents higher this morning.

  • Corn futures ended the overnight session 2 to 4 cents higher amid short-covering and ideas the market is due for a bounce.
  • Corn futures will need spillover support from the soybean market to maintain the overnight price gains through today's session as attitudes are negative and weather forecasts remain non-threatening.
  • While forecasts continue to call for below-normal temps, forecasters have scaled back rainfall chances for much of the Corn Belt over the next five days. Dryness concerns are building among some producers, but recent price action signals traders are not worried.
  • Weekly corn export sales were lighter than expected at 290,100 MT for 2012-13 and 220,900 MT for 2013-14. Traders were expecting to see sales of 600,000 MT to 1 million MT in response to the sharp price break.

 

Soybean futures are called 10 to 15 cents higher this morning.

  • Soybean futures ended 9 to 15 cents higher overnight amid ideas the downside has been overdone.
  • Weekly soybean export sales were just above the top end of the pre-report guess range at 1.097 MMT -- 79,400 MT for 2012-13 and 1.018 MMT for 2013-14. The leading buyers were "unknown destinations" (China?) at 525,000 MT and China at 381,000 MT.
  • Chinese soybean imports were record-large last month at 7.2 MMT. That was up 3.9% from June and 22.7% above year-ago. In addition, Chinese trade data for July is supportive as it showed total exports improved 5.1% and imports rose 10.9%.
  • China's attempt to auction old soybean reserves was met with tepid demand. Crushers bought only 89,928 MT out of 501,020 MT of 2009 and 2010 soybeans offered for sale.

 

Wheat futures are expected to open 1 to 3 cents higher on light short-covering.

  • SRW, HRW and HRS futures favored a firmer tone overnight amid spillover from corn and beans and light corrective buying.
  • Weekly wheat export sales were at the top end of the guess range at 726,200 MT for 2013-14. Brazil was the lead buyer at 169,500 MT, including 27,000 MT switched from unknown destinations. China bought 60,800 MT, including 55,000 MT switched from unknown destinations.
  • While wheat export demand has improved, traders are still concerned about sustained foreign buying interest as U.S. wheat is priced above other suppliers, especially Black Sea origin wheat.
  • A weaker U.S. dollar should add to the positive tone this morning.

 

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

  • News Tyson plans to suspend purchases of cattle fed beta-agonists, such as Zilmax, fueled very strong gains in cattle futures in electronic trade late yesterday afternoon and through the overnight hours. Traders feel this will reduce the beef supply, especially if other packers follow suit.
  • Traders are still waiting on cash cattle trade to develop. A strong performance in futures today could be enough to encourage packers to raise cash bids from the $119 to $120 prices they paid in the Plains last week.
  • The boxed beef market showed strength yesterday as prices were 77 cents to $1.49 and movement was solid at 212 loads. The product market may finally be showing signs of putting in a short-term low.
  • Weekly beef export sales of 8,900 MT were down from 11,400 MT last week.
  • Feeder cattle futures are expected to open the daytime session sharply higher in reaction to strong gains in live cattle.

 

Lean hog futures are called to open solidly higher this morning.

  • Lean hog futures are expected to open higher this morning on spillover from the cattle market and short-covering after yesterday's losses. The cash hog and pork product markets should also add support.
  • Cash hog bids are called steady to firmer as packers are working with profitable margins, giving them incentive to fill up kill lines.
  • Meanwhile, the pork product market continues to strengthen, which is helping boost packer margins. The pork cutout was only 6 cents higher yesterday, but packers moved a strong 483.5 loads of product on the day.
  • Weekly pork export sales of 4,800 MT were down from 9,600 MT last week.
     
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