Ahead of the Open (VIP) -- July 29, 2013

July 29, 2013 03:14 AM

Corn futures are called to open marginally to 2 cents lower.

  • Corn futures started the week under pressure to extend the price slide. However, September corn ended the overnight session marginally higher amid bull spreading.
  • All eyes are on the weather as corn has entered the peak pollination period.
  • The National Weather Service (NWS) forecast for Aug. 3-7 calls for below-normal temps and above-normal precip across the Corn Belt, which is viewed as beneficial for the crop.
  • As of July 23, hedge funds held a record net short positions to reflect their increasingly bearish attitude toward the corn market.
  • Gulf corn basis is steady this morning to stand $1.20 over September futures to reflect tight old-crop supplies, which is limiting pressure on September futures this morning.


Soybean futures are called mostly 10 to 15 cents lower due to non-threatening weather.

  • While front-month August soybeans ended the overnight session around 8 cents lower, new-crop futures were 10 to 14 cents lower as early August weather forecasts call for non-threatening weather.
  • The NWS forecast for early August calls for below-normal temps and above-normal precip, which traders view as beneficial to start the critical month for soybean development.
  • Otherwise, there's little fresh news for the market to digest, which is propelling bearish attitudes in new-crop futures.
  • Gulf soybean basis for immediate delivery stands at $1.65 over November futures (switchover from August contract) due to tight supplies, although demand for old-crop beans has softened.


Wheat futures are expected to be mixed, with upside potential limited by weakness in neighboring corn and soybean markets.

  • Wheat futures ended the overnight session narrowly mixed at all three exchanges.
  • Upside potential is being limited by weakness in the corn and soybean markets, while pressure is being limited by the recent uptick in demand.
  • Adding to demand expectations is news that Japan may officially lift its ban on U.S. western wheat this week. Traders sources says the country may require certification wheat is free of GMO material prior to shipment, but they believe this is a step in the right direction to resuming trade sooner rather than later.
  • Gulf SRW wheat basis is up 7 cents for immediate delivery to stand 47 cents over September futures to reflect demand improvements.


Live cattle futures are called to open slightly to moderately higher on higher cash hopes.

  • Live cattle futures are expected to start the week on a positive note after late cash trade on Friday in Nebraska and Iowa came in $1 higher at $121. This followed steady trade in the Southern Plains at $119.
  • Still, traders are still waiting on confirmation the boxed beef market has posted a low. Choice values finished last week 51 cents lower and Select firmed a penny on slow movement of 135 loads.
  • If the beef market doesn't improve early this week, higher cash hopes will fade.
  • Weakness in the corn market is also positive for live and feeder cattle futures.
  • August live cattle are trading at a slight premium to cash trade in Nebraska, while August feeder futures are trading at around a $7 premium to the index.


Lean hog futures are called to open mixed as traders reevaluate positions.

  • Lean hog futures are expected to be mixed as traders reevaluate positions and keep a close eye on the pork product market.
  • The cash hog market is expected to start the week mostly steady amid light demand as packers work to improve negative margins but deal with tightening market-ready supplies.
  • August lean hog futures ended last week at around a $2 discount to the cash index as traders see more near-term downside risk in the cash market.
  • Pork cutout values firmed just 18 cents on Friday and movement was moderate at 275.5 loads. If pork movement remains light this week, it will raise concerns about pork demand.
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