Ahead of the Open (VIP) -- July 11, 2013

July 11, 2013 03:16 AM
 

Corn futures are called to open mixed after a choppy overnight session.

  • Corn futures ended the overnight session mixed, although most contracts favored a firmer tone as traders remain concerned about the weather.
  • July corn ended 12 1/4 cents higher in overnight trade amid bull spreading due to tight old-crop supplies.
  • Weather models still support a building high pressure ridge over the central U.S. setting up by the weekend, which would ramp up temperatures and block moisture out of the Corn Belt.
  • Traders are working to even positions ahead of USDA's 11:00 a.m. CT reports. Traders look for USDA to trim old-crop carryover by around 47 million bu. from last month to 722 million bu. and for new-crop carryover to be trimmed by 75 million bu. from last month to 1.874 billion bushels.
  • Reuters reports that China's state grain buyer has recently purchased more than 1 MMT of U.S. new-crop corn.
  • USDA reports weekly corn sales of 392,000 MT for 2012-13 and 657,800 MT for 2013-14 -- coming in well above expectations. Mexico was the top buyer for both marketing years.
  • Adding to the positive demand news is another daily sales announcement from USDA. China bought 120,000 MT of corn for 2013-14 delivery.
  • The boost in demand for new-crop corn signals prices are a "value."

 

Soybean futures are called to open mixed with a downside bias amid bull spreading.

  • Soybean futures ended the overnight session 1/2 cent lower in the July contract and 1 1/4 cent higher in August; new-crop futures were 2 to 4 cents lower.
  • Futures were choppy overnight and softened in late trade. Key this morning will be how traders want to be positioned ahead of USDA's reports.
  • Traders look for USDA to trim old-crop carryover by 4 million bu. to 121 million bushels. The market expects USDA to raise new-crop carryover by 5 million bu. from June to 270 million bushels.
  • USDA announced an optional origin sale of 120,000 MT of soybeans to unknown destinations for 2013-14 delivery this morning.
  • This morning's weekly export sales data is mildly disappointing for the soybean market, as it showed net sales reductions of 70,900 MT for 2012-13. But sales of 410,800 MT were reported for 2013-14, which helped the overall tally meet expectations.
  • Traders are also keeping a close eye on the weather as the weekend forecast features a building high pressure ridge setting up over the central U.S., which would block moisture into the Corn Belt.

 

Wheat futures are called 3 to 7 cents higher on demand improvements.

  • Wheat futures ended the overnight session mostly 1 to 5 cents higher at all three exchanges.
  • Futures should see a boost from demand improvements. Weekly export sales of 1,473,300 MT for 2013-14 were primarily for China. Exports of 714,700 MT were mostly for Brazil. The sales report came in well above traders' expectations.
  • China's state grain buyer says its wheat imports will rise by 73% in 2013-14 to 5 MMT due to late-season weather trimming its crop. Its recent strong purchases of U.S. wheat are supportive for prices.
  • Traders are also beginning to focus on evening positions ahead of the 11:00 a.m. CT USDA reports. Traders look for USDA to tighten 2013-14 carryover by 35 million bu. from last month to 624 million bushels.
  • Traders also look for USDA to trim its all wheat crop estimate from 2.08 billion bu. last month to 2.057 billion bushels.

 

Live cattle futures are called mixed with an upside bias.

  • Following yesterday's weaker tone, live cattle are expected to benefit from some short-covering, but a mixed tone is expected as traders wait on cash trade to develop.
  • Choice boxed beef values slipped $1.25 yesterday and Select rose 20 cents on strong movement of 254 loads.
  • Traders are still waiting on the beef market to post a near-term low, but are encouraged by the pickup in demand.
  • Cash cattle trade will likely be delayed until tomorrow as bids and asking prices are several dollars apart.
  • August live cattle are trading at a premium to last week's $119 cash trade.

 

Lean hog futures are called to open lower on concerns about the pork market.

  • Lean hog futures are called lower on profit-taking following yesterday's gains due to weakness in the pork cutout market.
  • Pork values slipped $2.51 yesterday (led by losses in ribs) to push packers' profit margins in the red. Pork movement was strong at 427.9 loads.
  • The cash hog market is called steady to lower as packers have scaled back slaughter schedules due to poor profit margins.
  • Pressure on nearby futures should be limited by the discount those contracts hold to the cash index.
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