Ahead of the Open (VIP) -- December 3, 2013

December 3, 2013 02:13 AM
 

Corn futures are called 1 to 2 cents lower after seeing two-sided trade overnight.

  • Corn futures ended the overnight session mostly around a penny lower after a choppy overnight session.
  • The low-range close in overnight trade signals bears have momentum on their side heading into the daytime session.
  • News that China is likely to reject additional cargoes of U.S. corn after finding more unapproved GMO content weighed on futures late in the overnight session.
  • Traders are concerned the recent detection of Syngenta's Agrisure Vipera corn (MIR 162) will calm Chinese demand for U.S. corn.
  • Gulf corn basis is steady to 1 cent weaker for immediate delivery, but is 1 to 2 cents higher for February through April shipment.

 

Soybean futures are called 5 to 7 cents lower on followthrough selling.

  • Soybean futures ended the overnight session 5 to 7 cents lower through the July contract, with far deferred contracts marginally to 4 cents lower.
  • Beans enjoyed slight gains in early overnight trade, but that gave way to selling after futures posted bearish reversals yesterday.
  • A low-range close today would suggest a near-term high has been posted.
  • Adding to weakness in nearby futures is a 5-cent softening of Gulf basis for immediate delivery to stand 94 cents over January futures.

 

SRW wheat is called mixed, with HRW and HRS expected to open 1 to 2 cents higher.

  • SRW wheat ended the overnight session narrowly mixed, with HRW marginally to 3 cents higher and HRS up 1 to 2 cents.
  • Weakness in the U.S. dollar index is supportive for the wheat market this morning, although traders need a dose of fresh demand news.
  • Limiting buying is news that the Australian Bureau of Agriculture and Resource Economics (ABARES) raised its 2013-14 Aussie wheat crop forecast to 26.213 MMT from 24.467 MMT previously, citing favorable weather in Western Australia.
  • Traders are also awaiting on results on Egypt's wheat tender, as the country is known as a value buyer.
  • Gulf SRW wheat basis is steady for December delivery but up 9 cents for January through March delivery to suggest strengthening demand.

 

Live cattle futures are called mixed amid light trading volume.

  • Live cattle futures are expected to see a choppy start amid light volume as traders wait on clearer direction from the cash market.
  • This week's cattle showlist is smaller across the Plains, which gives feedlots more bargaining power.
  • While feedlots will be asking for higher prices, packers are dealing with negative profit margins and may be resistant to raising bids.
  • Choice beef values were 18 cents higher yesterday, with Select up $1.07. But movement of just 65 loads signals slowed demand.
  • Weakness in the corn market this morning is supportive for feeder cattle futures.

 

Lean hog futures are called mixed amid lackluster trade.

  • Hog futures are expected to see a choppy trade amid light holiday-type trading volume.
  • Pressure should be limited by strength in the pork cutout market, as values firmed $1.11. However, movement was light at 257.3 loads.
  • Gains in the pork market should be enough to keep the cash market steady at most locations today, especially since some packers are in need of supplies after the holiday shortened kill schedule.
  • December lean hog futures hold more than a $4 premium to the cash index, which raises the risk of stepped up selling.
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