Ahead of the Open (VIP) -- July 25, 2013

July 25, 2013 03:12 AM
 

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

  • Corn futures were anchored near unchanged for much of the overnight session, but spillover pressure from beans led to a poor finish as overnight trade was suspended.
  • In addition to spillover from soybeans, corn futures are fighting favorable weather. Forecasts call for normal to below-normal temps and normal to above-normal precip through the Corn Belt over the 10-day window. As a result, traders feel weather is favorable for crop development.
  • Weekly corn export sales won't help bulls any this morning. USDA reported net sales reductions of 27,900 MT for 2012-13 and sales of 515,900 MT for 2013-14. Combined, that was below the pre-report guess range.
  • South Korean feed makers have stepped up purchases of corn this week, but much of the business has been for cheaper supplies than U.S. corn. Traders are still waiting to see if Chinese buyers will step up on the price break.

 

Soybean futures are expected to open with double-digit losses this morning.

  • August soybean futures finished 32 3/4 cents lower and the September contract was 24 3/4 cents lower overnight. New-crop futures were 15 to 19 cents lower overnight.
  • Traders continue to actively liquidate August positions in soybeans and soybean meal, which is weighing heavily on deferred contracts.
  • Additional pressure is coming from the weather as forecasts call for generally cooler and wetter conditions for the Corn Belt through the 10-day window. Traders feel that will be beneficial for crop development.
  • Weekly soybean export sales were greater than expected at 128,300 MT for 2012-13 and 665,200 MT for 2013-14. China accounted for 426,000 MT of the new-crop business.

 

Wheat futures are seen opening the day session with a narrowly mixed tone.

  • SRW wheat futures faded late in the overnight session on spillover from beans and corn. HRW and HRS wheat futures managed to hold onto slight gains overnight.
  • If the overnight selling in soybeans and corn continues this morning, wheat futures will struggle to fend of the pressure. Wheat doesn't have enough strength to divorce itself from the other markets and actively rally.
  • Weekly export wheat sales were stronger than expected at 661,400 MT. As expected, China was the lead buyer.
  • Day 2 results from the Wheat Quality Council HRS tour showed an average yield on hard red spring wheat samples in northwest and north-central North Dakota of 45.1 bu. per acre compared with 45.5 bu. per acre last year and a five-year average of 42.6 bu. per acre. The tour concludes this afternoon with scouts sampling in north-central and northeast North Dakota and northwest and west-central Minnesota today. Final tour results will be released this afternoon.

 

Live cattle futures are called to open mostly lower. Feeder cattle are seen opening with a mixed tone this morning.

  • Light and choppy trade is again expected in the live cattle market as traders wait on more active cash cattle trade in the Plains.
  • Initial cash cattle activity occurred at steady $119 prices in Kansas Wednesday, though most Plains feedlots are holding out for firmer bids. August live cattle futures finished yesterday at roughly a $2.50 premium to the cash market.
  • Choice boxed beef prices were 55 cents higher and Select firmed 72 cents yesterday on solid movement of 214 loads. But traders will want to see stronger trade for multiple days before they sense a short-term low has been posted.
  • Weekly beef export sales totaled 14,900 MT, which was down slightly from 15,200 MT in last week's report.
  • Feeder cattle futures are expected to be choppy. While weakness in corn is supportive, an expected lack of buying in live cattle will limit buying interest.

 

Lean hog futures are expected to open under light pressure this morning.

  • Lean hog futures are likely to face light selling pressure this morning amid weakening cash and product markets. But selling interest should be limited by the discount futures hold to the cash market.
  • Cash hog bids are expected to be steady at most Midwest locations, though some weaker bids are likely as packers work to protect margins amid falling pork product prices.
  • The pork cutout value was $1.01 lower Wednesday amid losses in all cuts. As hog numbers start to build seasonally, packers may have to further lower pork prices to encourage product movement.
  • Weekly pork export sales totaled 6,800 MT.
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