Ahead of the Open (VIP) -- July 26, 2013

July 26, 2013 03:04 AM
 

Corn futures are called to open steady to 2 cents higher, though two-sided trade is expected this morning.

  • Corn futures ended the overnight session fractionally to 1 cent higher amid light short-covering following two-sided trade.
  • Needed rains pushed across the western Corn Belt overnight. Inch-plus totals were seen in areas where rains were the heaviest. The rains have moved into the eastern Corn Belt this morning.
  • The 10-day weather window continues to show normal to below-normal temps and normal to above-normal precip. As a result, traders continue to deem weather as non-threatening and price-negative.
  • South Korea bought another 65,000 MT of optional origin (likely Black Sea) corn overnight, but demand for U.S. corn has yet to develop on the price break. Traders are waiting on Chinese demand to resurface and signal prices have dropped far enough.
  • USDA reported daily sales of 211,328 MT to unknown destinations, with 8,128 MT for 2012-13 and 203,200 MT for 2013-14.

 

Soybean futures are expected to open mostly 3 to 5 cents higher this morning.

  • August soybean futures finished 3/4 cent higher overnight, while deferred contracts were 3 to 7 cents higher.
  • Ideas recent losses were overdone should encourage short-covering today, though buying will likely be corrective in nature given favorable weather.
  • Dry areas of the western Corn Belt got needed rains overnight. Those rains have pushed into the eastern Belt this morning.
  • In addition, the 10-day weather picture is seen as non-threatening as forecasts call for normal to below-normal temps and normal to above-normal rainfall into early August.
  • USDA reported a daily sale of 220,000 MT of U.S. beans to China for 2013-14.

 

Wheat futures are seen opening the day session mostly 3 to 5 cents higher.

  • All three wheat flavors -- SRW, HRW and HRS -- were firmer overnight amid corrective short-covering.
  • In addition to ideas recent losses have been overdone, weakness in the U.S. dollar index is also price-supportive this morning.
  • After sampling fields in North Dakota, far northern South Dakota and far western Minnesota the past three days, scouts on the Wheat Quality Council HRS tour calculated a hard red spring wheat yield of 44.9 bu. per acre, which was exactly the same as they found last year, but greater than the five-year tour average of 43.3 bu. per acre. Tour participants say while yield potential is the same as year-ago, this year's crop still has a ways to go before harvest because of the delayed start.
  • There continues to be a smattering of wheat demand news, but interest in U.S. supplies is lacking as prices are higher than our competitors.

 

Live cattle futures are called to open with a slight upside bias. Feeder cattle are called mostly lower.

  • Traders expect live cattle futures to open with a slightly firmer tone, though price action is likely to be light and choppy.
  • Moderate cash cattle trade has been seen at steady $119 prices in the Plains this week, but some feedlots are still holding out for firmer cash bids. It's uncertain if feedlots will move the remainder of this week's showlist if bids don't improve.
  • Boxed beef prices firmed for a second straight day on Thursday. While this suggests a short-term low may be in the works, it's too early to say that for certain. Once the product market bottoms, traders should show more interest in the long side of futures.
  • Feeder cattle futures are expected to be under light pressure as the market retreats following recent gains. But if corn futures continue to fall, selling interest will be limited to mild profit-taking.

 

Lean hog futures are expected to with a mixed tone this morning.

  • Lean hog futures are expected to see two-sided trade this morning. Traders are working to narrow the spread between futures and the cash market, but the cash market is expected to face additional near-term weakness.
  • Cash hog bids are called steady at most Midwest locations as packers appear content to kill whatever hogs they can buy without raising cash bids. But scattered weaker cash bids are likely in some areas.
  • The pork cutout value was $1.04 higher Thursday, which helps margins, but they remain in the red.
     
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