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

December 5, 2013 02:08 AM
 

 

Corn futures are called 3 to 5 cents lower.

  • Corn futures ended the overnight session 4 to 5 cents lower as there was no followthrough buying after yesterday's gains.
  • Weekly corn sales of 593,600 MT for 2013-14 were below expectations, but exports of 1,042,100 MT were strong.
  • Traders are also reacting to news the China National Grain and Oils Information Center revised its forecast of this year's China corn crop to 217.51 MMT amid higher planted area and improved yields.
  • Key will be if funds use the expected early price pressure to cover more short positions. They've bought a net 17,000 contracts (85 million bu.) of corn the past two days amid short-covering.

 

Soybean futures are expected to open 4 to 6 cents lower despite strong weekly export sales.

  • Soybean futures ended the overnight session mostly 4 to 6 cents lower amid profit-taking. Funds may also look to lighten their long exposure ahead of year-end.
  • Pressure should be limited by this morning's stronger weekly sales report that showed soybean sales of 805,200 MT for 2013-14 and 355,600 MT for 2014-15. The combined tally was at the top end of pre-report expectations.
  • Also this morning, USDA announced a 110,000-MT soybean sale to China for 2014-15.
  • But a favorable start to the growing season in South America is price-negative.

 

Wheat futures are expected to open 6 to 8 cents lower on disappointing weekly export sales.

  • All wheat flavors were pressured overnight, which is expected to spillover into this morning's open.
  • Weekly wheat export sales of just 229,200 MT were well below expectations and were a marketing-year low.
  • The slowing sales pace and a strengthening U.S. dollar index this morning raise concerns about the competitiveness of U.S. wheat on the global market.
  • The Food and Agriculture Organization of UN raised its 2013-14 world wheat crop forecast by 2.3 MMT to 710.8 MMT.

 

Live cattle futures are called mixed as traders wait on cash cattle trade to begin.

  • Live cattle futures are expected to see another choppy day of price action as traders wait on cash trade to begin.
  • Expectations are for at least steady cash prices compared with last week's $132 trade due to smaller showlists.
  • Choice beef values firmed 30 cents yesterday and Select rose 9 cents on moderate movement of 155 loads.
  • December live cattle are trading at a small premium to last week's cash trade, with the February contract holding some carry as traders anticipate supplies to tighten further into 2014.
  • Feeder cattle futures should get a boost from expected weakness in corn, though a lack of buying in live cattle could limit gains.

 

Lean hog futures are called lower on followthrough selling.

  • Lean hog futures are expected to see chart-based followthrough selling after doing technical damage this week.
  • Traders are also looking to narrow the gap between December hogs and the cash index.
  • The pork cutout value dropped $1.24 yesterday, which is also expected to weigh on futures.
  • The good news is packers moved 506.42 loads of product yesterday, which suggests there's still plenty of retailer demand for pork.
  • However, due to plentiful supplies of market-ready hogs, expectations are retailers will continue to demand lower prices for pork, which points to a softening tone in the cash market.

     
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